Saturday, July 31, 2010

Toyota's Global Strategy — Moving toward Global Motorization

Find out below the Toyota Global Strategy. It has been known that Toyota is the benchmarking company for automotive industry today. The Operational excellence can beat the US auto domination.

Just Check it out!

Toyota's Global Strategy

Sunday, July 25, 2010

Study About Staff Turnover Management

Turnover of employee is one of management problem in 21 century. Talent mobility accross organization is grow rapidly, creating issues on how to make employee to be more engaged, loyal, and productive towards organization. Wrong turnover management is bad for organization, and costly due to talent movement to other organization.
Checkout those studies and review some strategies for your organization.

1. The Study of Labour Turnover
2. Complete Report - Employee Retention & Labour Turnover
4. "Putting a price on Staff Turnover" a case study

The Latest Thinking on Reducing Staff Turnover

What does turnover cost your organization? How many staff left your organization last year? What did that cost you in terms of recruitment, screening, training, reduced service and lost revenue? Even at entry levels, the cost of staff turnover has been placed at around $7500 per incident. So if you have a staff of 100 people and your turnover rate is 10% your cost of turnover is going to approach $75000...that's cash out the door. Your situation may be different, better or worse, but until you determine what the cost of turnover is for your company or your organization, any initiative that you might want to undertake to reduce turnover will seem too expensive.

You have probably heard that people don't leave jobs, they leave supervisors. In the leadership development work that my company does, we see time and time again that many supervisors simply lack the people skills to become good supervisors. They may have been excellent at the production job or their service delivery job and that is why they were promoted to supervisor. But, what is often not recognized is that they now have a new job and it's very different than the job they formerly had; it involves the management and motivation of people.

To complicate matters, in many organizations the role of a supervisor is seen as being a "taskmaster"; to make sure that people produce the maximum number of widgets possible in 8 hours. There is little room or concern for the welfare of the employee; very little commitment to the success of the employee; it's a sink or swim proposition. In most organizations, the pattern goes like this. The employee is hired, put through an orientation where more information is thrown at him/her than could possibly be absorbed. Thereafter the new employee is assigned to the work environment. If the employee begins to have performance problems, the disciplinary process begins and before you know it, the person is never seen again. Of course all of this happens in a pretty public way. That is, other employees observe the process and quickly get the message that the company lacks commitment to the success of its employees. The relationship between employees and their supervisors is unfortunately not always a good one. A recent study done by the University of Florida suggested that more than half of all employees do not trust their supervisor on a number of key measures.

What does it take to keep employees happy and productive? It can be pretty simple. Sometimes all it takes to keep an employee happy and fully engaged is an occasional "thank you". Motivating people is not rocket science. Communication is another key. If managers need employees who will support their vision for the company, that vision has to be discussed with them frequently. And they'll need coaching in terms of how to go about their jobs in a way that truly supports the desired company objectives. Finally, Herb Kelleher, founder of Southwest Airlines, believes that the company's real challenge is to take care of its employees. Employees who sense the interest and concern of management for their success are the best sales reps the company could want; the customers will be there and will be there repeatedly.

If you would like to cut your turnover in half, follow some of Larry's suggestions for better staff morale and other leadership tips that are discussed in his FREE newsletter. It's free and is distributed twice a month. Each issue is short, to the point and has an article of interest to organizational leaders. Click on the link below to subscribe.

Leadership Training

Article Source

Larry Wenger - EzineArticles Expert Author

Is Your Employee Turnover Rate Acceptable?

Employee turnover is inevitable. But it's stupid decisions leading to employee turnover that is eating up the profits of businesses.

A glaring example of management drinking its own Kool-Aid is something I call "industry-average syndrome," where managers accept turnover as normal because it's near or slightly under the industry average. My mother used to reprimand me when I got in trouble with friends by asking, "if your friends jumped off a bridge, would you follow?" Apparently many employers heard that same message too. Unfortunately, rather doing a little critical thinking, they are literally jumping off the bridge when it comes to managing employee turnover.

It's a sure thing that workers will come and go for reasons ranging from unpredictable life choices to avoidable stupid hiring decisions. There will always be turnover. But using the industry average as your standard is a cop-out and a very bad practice. That thinking might have worked when margins were high and it was easy to raise prices, but it's unacceptable if you want to stay in business today.

Employee turnover should be treated like a cancer, not the common cold. The cost of turnover is staggering. The effort and sales needed to recoup these costs can be devastating.

Management has no one to blame but itself in many cases.

Research studies have consistently shown that turnover in North America ranges between 25-30% on average. With estimates for the true cost of turnover ranging from 25% for entry level jobs to 250% or more of annual salary for senior management, it's not rocket science to realize that this can't continue. These averages deceive management and suck time away from projects, resources and profits to reinvest for growth and innovation.

In a recent study by the Canadian Grocery Human Resource Council (CGHRC), participants reported an overall employee turnover rate of 38.7%, with an average voluntary turnover rate of 31.7%. The study concluded that turnover should be defined as "an expense without an invoice."

Additional research by the Canadian Food Industry Council (CFIC) found that the cost of turnover; finding, interviewing, training and equipping a new hire; is at minimum $1,500 per frontline employee.

Now $1,500 may not really sound like a lot of money until you factor in that nearly four out of every 10 new employees leave for whatever reason. To put that $1,500 figure into perspective, consider what it takes for one store to recover that cost: If a store's net margin is 1.5-3%, the store has to sell $60,000 worth of groceries to recover the cost of losing a single employee!

If that doesn't give management pause for thought, what will?

The first step in reining in runaway labor costs is to calculate what your cost of turnover is in the first place. In other words, for every employee you need to replace, what does it cost you to recruit, hire and train a replacement? I'd then take it one step further: how many sales does it take to recover those costs?

Take a few minutes to figure out what it costs you every time an employee goes home and doesn't return...and how hard you have to work to recover this expense without an invoice.

Copyright (c) 2010 Success Performance Solutions

Ira S Wolfe is a "Gen Y trapped in a Baby Boomer body." He is a widely respected expert, speaker, and consultant on workforce trends and pre-employment. In addition to serving as president of Success Performance Solutions, he is the author of "Geeks, Geezers, and Googlization" and "Perfect Labor Storm 2.0."

Article Source

Thursday, July 22, 2010

What is SWOT Analysis

SWOT analysis or position analysis is a crucial exercise that all businesses should undertake at regular intervals, whether they are new or old. It is basically a critical appraisal of the Strengths and Weaknesses, Opportunities and Threats in relation to the internal and environmental factors affecting a business.

By undertaking a SWOT analysis a business will be able to prepare much better short and long term plans. It will also allow them to identify gaps between their actual and desired performance and aid them in closing these gaps.

  • Strengths- These are the things that your business does well. It may be that the marketing of your organisation is better than your competitors' or your product is more advanced. Whatever these attributes are, list them down under this heading.
  • Weaknesses- This is an area where you will need to be very truthful withy yourself. Here you need to list down things about your organisation where the performance is weak. For instance, your business may not be very good at dealing with customer complaints and as a result your retention of long term customers or repeat orders may have suffered.
  • Opportunities- These are environmental factors that can be exploited. For example it may be that your current product or service can be enhanced by the introduction of some new technology that has been developed. Another example might be that a law has been changed in the country you are operating in and that change has opened up a new distribution channel for your product or service. When you look at this area you will need to think long and broad outside your business.
  • Threats- These are environmental factors which may lead to a deterioration of your business performance or a weaker position in your chosen market place. For instance, two of your competitors may have merged their respective businesses to form a more powerful organisation with economies of scale. In turn, they may have reduced their prices and it may be difficult for you to compete with them.

If you undertake the SWOT analysis and make it part of your annual or quarterly business appraisal, you are likely to spot market opportunities more quickly, improve on your products and service levels and reduce the effects of external influences on your business. This analysis is a very good tool to ensure that you make the right decisions as regards the future of your business.

The History of A Strategy Map Balanced Scorecard

A lot of people are intrigued to know what a strategy map balanced scorecard is. But most of them do not even know what it is for. They are only getting attracted to it since it has become a trend where business owners are encouraged to get. For this reason, a number of strategy maps are not working out. If you are a business owner, it is a good to know what this map is before getting one. A short history of the strategy map balanced scorecard can be dated back to 1987, when it was first introduced. In a way, this is a concept wherein the goals of a business are being enlisted with a visual representation. They are no longer limited to the imagination of the business owner as these maps are readily available to all the employees of the company.

Ever since its introduction, the strategy map balanced scorecard has been able to gain much popularity and is currently being used by almost all industries. But the real aim of this concept was due to the needs of its developers, Analog Devices, to determine if their business' goals are being met. Once the company was able to depict their business goals, they were able to determine the factors that were causing delay to achieving them. At the same time, they were able to come up with possible cause and effect methods in order to make sure their goals could be achieved. And this led onto the popularity of the concept.

Sadly though, a lot of companies focus too much on their financial issues instead of looking at the whole issue. They tend to forget that there are other factors that can help affect their business. Among these factors include their human capital, management, resources, and a lot of other things to consider. But thanks to the strategy map balanced scorecard, business owners are able to tackle each of these factors individually. As such, they are able to create plans of action on how these issues can be improved.

Since then, the popularity of the strategy map balanced scorecard has rapidly evolved. Today, it has even come to a point where there are so many different software programs that business owners can use. In addition, these software programs have been improved and made more effective in terms of measuring the business' performance.

Surely, the strategy map balanced scorecard has come a long way since it was first developed in the early 1990s. To what started as a concept, has largely evolved into an actual diagram. But before software programs were introduced, the balanced scorecard was done using various programs such as Word, Excel, and PowerPoint. Even though these programs were already effective, other people still wondered how they could disperse their data quickly and securely. Aside from that, business owners were also thinking of ways they could communicate and connect the strategy map with their employees in a timely manner. Thus, the software program for balanced scorecard was born.

To this day, hundreds and even thousands of companies are using these software programs. For this, they have been able to achieve their business goals that they initially thought was almost impossible to do.

If you are interested in Strategy Map Balanced Scorecard, check this web-site to learn more about BSC Strategy Map.

Article Source

Wednesday, July 21, 2010

The Best Principles of Management

When they were planting the Toyota seed many years ago, they knew what would appeal to our senses. They had a plan to get just that from us. Then, they emerged with fourteen strong management principles to take the plan right to us and to get all of our attention.

Today, they have executed that perfectly, which is the reason the Toyota brand has kept its enigmatic place in the global auto market. This is how the Toyota business philosophy was so brilliantly performed, that many are thinking its a mystery.

Jerry K. Lister explains why Toyota has become a global symbol of passionate commitment to continual improvement and efficiency. Toyota's success as the world's most profitable automaker is no accident and now, thanks to Liker's book. THE TOYOTA WAY, its no mystery, either. Liker drills down to the underlying principles and behaviors that will set your company on the Toyota way.

Fourteen principles are stated upfront, and then a chapter is committed to expatiating each of these principles. The writing is clear and many outside sources are acknowledged with a thoroughness that is uncommon in business books. beautifully, 28 Toyota executive are acknowledged or quoted-and they tell the lessons of how the automaker keeps to the path that has seen it to the top. And these management philosophies can't fail to work anywhere they are put to use in the business world.

The executive quoted in the book clearly feels that the philosophy is more important than the technical tools of production system. This insight, however, has come to them as a result of using the tools intensively for many years. and the reader should not be misled into thinking that it is possible to bypass the tools and go straight to the philosophy.

After studying the process at Toyota for over twenty years, professor Liker emerged with the 320-page "the Toyota way", revealing the fourteen fundamental management principles forming the pillar of the automaker's world-renowned system of "Lean production". Interestingly, the fourteen principles could easily be compressed into two broad categories that support Toyota's success formula: "continuous improvement" and "respect for people." And yet we know we don't improve to satisfy animals. We simply do to satisfy that rational man. being the case, it can never be bad to see the success of Toyota's management philosophy as a single piece-"Respect for people." This is the whole story behind "The Toyota way." We draw,perhaps, our biggest business lesson here: The sky is the starting point of business outfits that have learnt to respect the consumer in words and deeds.

The Toyota way insists on basing management decisions on a "philosophical sense of purpose", thinking long term, having a process for solving problems, adding value to the organization by developing its people, and recognizing that continuously solving root problems drives organizational learning.

Article Source:

Applying Blue Ocean Strategy to Product Development

Henry Ford didn't invent the car. He wasn't even the first manufacturer of the car. In fact, when he jumped into the industry, there were more than 500 manufacturers building automobiles. That's a heavy market. It's what some call a red ocean, tainted by the battling competition. So, why is it that we think of Ford when we think of cars? Because he didn't sail that red ocean. He made a blue ocean strategy that not only built long-term brand equity, but brought the cost of a car down from $1,500 to $250 in a matter of a few years, sending him into uncontested market space.

Not long ago, W. Chan Kim and Renée Mauborgne detailed the benefits of a blue ocean strategy in the Harvard Business Review. They define a red ocean as an existing industry where value is lost to cost-cutting warfare. On the other side, a blue ocean strategy is one that creates new markets through differentiating, much like Ford.

This same strategy should be applied to new product development. Of course, innovating product lines to win the competition's customers and cutting manufacturing costs with better designs is important, but creating entire new markets and categories untouched by competition and keeping costs low paves the way for real success.

Recently, we worked with a Canadian company, Calego, which focuses on matching character licenses with a variety of products, some of which fight in a red ocean. They were seeking new innovations for licensed characters. We could have slapped these images on current products with hopes they would sell by the license alone, but it would have been a waste of the value. Instead, we decided to search for a blue ocean strategy. What's something new? What's something no one has done in the market?

We found that consumers with young children were having difficulty keeping the children focused at the dinner table. With toys and technology vying for dinnertime attention, children are often not sitting still, much to the grievance of their guardians. So we set forth to open this doorway with a line we call interactive mealtime parents. We set a goal to turn otherwise normal mealtime products, such as plates, cups and bowls, into real attention-grabbers for children.

We created the Dinner Spinner(TM), a plate that spins at a touch of a button; the Talking Tumbler(TM), an interactive cup that talks when a child picks it up; and the Slide Show Tumbler(TM), which sends a lighted film strip rotating around the cup when activated.

Taking this blue ocean strategy approach for our client, Calego, has led to an almost endless supply of products for us to experiment with in design -- and without the fear of a lot of competition standing in our way.

Build value and brand equity by becoming recognized in markets without a lot of competition. Applying a blue ocean strategy to product development gives you room to grow comfortably and it places you in plain view of your customers. Otherwise, you'll be forced to bump shoulders, nearly invisible in a crowded sea of competitors, and forced to sacrifice value to make it all work.

by George Davison

For nearly 20 years, George Davison has focused his life on helping inventors, people with ideas and corporations with product development, licensing and patenting. He is the founder and CEO of George Davison's Inventionland. Learn target="_new" more at his blog.

Article Source

Innovation - Core Competency For the 21st Century

Despite the growing recognition that innovation is the only sustainable source of growth, competitive advantage, and new wealth, an Arthur D. Little survey of 669 global company executives found fewer than 25 percent of the companies believe innovation performance is where it needs to be if they are to be successful in the competitive marketplace. Having tried an endless array of alternatives, company leaders are now accepting enterprise wide innovation as a key operational discipline, just as in the past they adopted the disciplines of quality, planning, and management.

Of course, innovation is not a new discipline in most organizations. But the old ways, even those that may have worked in the '80s and '90s, are no longer adequate. Firms across the board are engaged in exciting experiments to reinvent the way they create the future, because "business as usual" hasn't produced the desired results.

Given the torrid pace of technological and global change, the commoditization of product lines and industries, and convergence of strategies, companies are literally having to reinvent how they accomplish the all-important task of "inventing the future." Having examined numerous companies and their innovation approaches for a forthcoming book, I believe that, winning firms will embrace the following four essential principles of managing innovation in the new century.

Principle No.1 - A company's approach to innovation must be comprehensive. One day in l977, an engineer at Canon put a hot soldering iron a little too close to an ink-filled syringe. The heat boiled a tiny amount of ink in the needle, expanding it into a gas, which pushed ink out the tip of the needle. The result of this accident was Canon's breakthrough bubble jet printing technology.

At Pfizer Pharmaceuticals, scientists attempting to produce a drug that would stimulate receptors in the human heart ended up stimulating receptors elsewhere in the human anatomy, giving rise to the impotence wonder drug Viagra. NutraSweet, the artificial sweetener, was discovered when a research chemist working on an ulcer treatment, licked his finger to pick up a piece of paper and noticed the astonishingly sweet taste.

While spending millions and even billions of dollars annually on research, most companies innovation successes come about primarily by accident. And while serendipity will always play a role in innovation, most companies approach their innovation process in a piecemeal, haphazard fashion that is anything but comprehensive. This can backfire, as Gillette discovered.

Gillette powered through the previous decade largely on the strength of a breakthrough product: Sensor. Introduced in l990, the new shaving system kept imitators at bay with no fewer than 29 patents and men from Jakarta to Peoria to Paris raved about the closeness of the shave. Despite selling at a hefty price premium, Sensor outsold its nearest rival ten to one. Wisely wasting no time after Sensor's launch, Gillette began development of Sensor's offspring, Mach3, which was introduced in l998.

But Mach3, while a hit in North America, did not have the same impact on revenue growth or stock price for Gillette. The super-premium product sold poorly in financially depressed Asian countries, growth stalled, and suddenly Gillette was being mentioned as a takeover target. Formerly laudatory Wall Street analysts began focusing on Gillette's heretofore hidden weaknesses:... inertia, inefficiency, mismanaged inventories and receivables, a Golbergian corporate structure cobbled together over years of acquisitions, it underperforming divisions.

The lesson of Gillette's sudden reversal of fortune is this: while breakthroughs like Sensor are beneficial, innovation must be promulgated in every area of the firm. Today, the practice of innovation is generally similar to how companies approached quality in the early 1980s. In those days, quality was a department - products were inspected before they were shipped. Now, quality is the responsibility of everyone in the organization. It has become systematized: "It's the way we do business around here." Today innovation is still confined to a few departments - primarily R&D or marketing. New ideas are almost always directed from the top down, rather than emerging from the bottom up, from suppliers, or from customers. But we are rapidly entering an era in which innovation, by necessity, must become everyone's responsibility.

To produce ongoing results, a small but growing number of firms are making innovation as much a responsibility of purchasing, operations, and human resources, as it is for new product development or marketing. It is not just a term to drop into the company's advertising and marketing, it must be part of the DNA of the organization. This deep commitment to innovation as a core competency doesn't preclude a company from purchasing smaller start-ups as part of its growth strategy. B&D (buy and develop) is quickly taking its place alongside R&D (research and develop) as part of company's comprehensive approach. But growth through acquisition is no substitute for a deep-seated commitment to home grown innovation, if those acquisitions are to bear fruit.

The only thing that separates you from your competitors are the skills, knowledge, commitment, and innovative abilities of your people. To win the competitive game, every company must strive to provide customers with a value proposition that is noticeably superior to the one you offered yesterday. To win, companies must respond to newly emerging customer needs with well designed products and services and business models that anticipate these needs. They must employ new technologies that reduce their cost of doing business, and allow for greater speed and customization.

For these reasons, innovation cannot be confined to one or two departments or farmed out to an elite group of star performers. Instead, it must permeate the entire company, and it must encompass new products, new services, new processes, new strategies, new business models, and the pursuit of new markets. It must be comprehensive.

Principle No.2 - Innovation must include an organized, systematic, and continual search for new opportunities. Back in the early 90s, AT&T's top brass allowed a small unit of its mammoth planning department to call itself the Opportunity Discovery Department, or ODD for short. This band of maverick thinkers gave itself the truly odd task of shaking up the giant company's thinking. One day in l995, members of the unit donned sandwich boards outside an important meeting which read: "what if long distance were free?"

While the question was dismissed as "ridiculous and irrelevant" at the time, today AT&T's long distance revenue is declining so rapidly that the company may sell off its long distance business in order to pursue faster-growing parts of its portfolio. Moral: today's seemingly irrelevant question could quickly become tomorrow's threat - or opportunity.

What methods do you and your company employ to detect changes that could spell doom - if appropriate action isn't taken, or boom, if they are. At firms that make innovation a core competence, specific systems and practices are in place that promote a deeper understanding of social, demographic and technological change. Delphi Thermal Systems, the Westport, N.Y. division of Delphi Automotive, has a Futures Council. Eastman Chemical in Kingsport, Tenn., has formed a think tanks to track the trends and ask searching questions such as: What do these developments mean to us? How might we take advantage of them? What threats are on the horizon that we must respond to now if we are to turn this change into an opportunity?

While such questions are traditionally the purview of senior management, the pace of change today requires broader participation. Forming opportunity-spotting teams allows people from all functional areas and all areas of the company to self-select for participation.

Beyond merely amassing data, such teams can be helpful in discovering hidden opportunities, and in "assaulting assumptions" that might preclude exploration from traditional departments. Creativity is valued in such teams, and is allowed to flow freely. Successful innovation means more than just hatching ideas. It means being able to move on those novel solutions and champion them into specific results that create tangible customer value, improve processes, and build new opportunities. Creativity and passion are required at the inception and during each phase along the way to deal with bureaucracy and inertia. From the smallest improvement to the "bet the company" mega-product, ideas depend on people's commitment to bringing them to fruition.

Futures councils or "opportunity SWAT teams" as they are sometimes called, won't guarantee you'll be a first mover on any trend. They won't guarantee you'll spot discontinuities. What they will do is provide an early warning system for imagination and innovation and creativity and dreaming to become a part of the fabric of the organization where none existed before. The trick then is to keep the momentum going, to sustain the enthusiasm.

Principle No.3 - Organizations must involve everyone in the innovation process. Today, the vast majority of organizations don't pay their people to innovate. In fact, they don't even expect them to think! Nearly two thirds of 641 managers and hourly workers surveyed by consultant Kepner-Tregoe of Princeton, New Jersey, said their companies don't use even half their brainpower. More than 70 percent compared their organizations to a "slow moving truck" blaming the condition on a failure to involve employees in decisions and a lack of training or rewards. Many jobs have actually been designed to eliminate the thinking component altogether, and not just entry level jobs either. Then, in the midst of a crisis, employees are asked to suddenly be creative, to "think outside the box," and management is underwhelmed by the results.

In the innovation economy, this dormant creativity must be tapped. Unleashing people's ability to solve problems and create opportunities becomes paramount to survival. Teaching people how to "work the system" in an organization, and to champion their ideas toward implemented solutions is quickly becoming the real work of forward-looking training departments.

A few companies have known this all along. Akio Morita, the founding chairman of Sony, believed that a company would never rise to its potential if all the thinking was left to management. "Everybody in the company must contribute," Morita wrote in his book, Made in Japan, "and for the lower-level employees their contribution must be more than just manual labor. We insist that all of our employees contribute their minds."

Beyond a seldom-used suggestion system for cost-saving ideas, most companies have no organized method for stimulating or harvesting the good ideas of their most valuable resource, their people. Not so at companies that are architected for continuous, all-enterprise innovation. Some of Dana Corporation's plants receive 3.5 ideas per month, per employee, with a 75 percent implementation rate. At Disney, a thrice-yearly Gong Show, where anyone in the company can pitch a new concept, is the forum where the company's retail format was first proposed by an employee. At London-based Virgin Group, a flight attendant who didn't like how she was treated in planning her own wedding, that led Alisa Petchey to pitch the idea through the company's Speak Up Program.

Not all ideas that people come up with will be useful. Many will be redundant, self-serving, and absolutely useless. But not to have an organized method for harvesting ideas is tantamount to erecting a billboard at the entrance to your company announcing, "If we had wanted your ideas, we would have asked for them."

Principle No.4 - A company must work constantly on improving its climate for innovation. The word culture is generally used to describe a company's values, traditions, priorities, and paradigms. A company's culture may be centered on spreading its service ethic, "going the extra mile for the customer," or its fierce commitment to quality, or engendering loyalty to "the company way," while its climate may stifle innovation by fostering too much loyalty and an unwillingness to make a mistake or take a risk.

To gauge the climate in your firm ask yourself these questions: What happens to creative, out-of-the-box mavericks in your company? What happens when someone fails? How many people say to employees, "We want you to take risks, and we want innovative ideas bubbling forth. And, by the way, we also want you to make your numbers, and we don't want any embarrassing failures." Unfortunately, only the latter half of that message gets communicated. The first half falls on deaf ears.

There are at least three possible responses to a "failure." You can: a) cover up the failure and refuse to acknowledge it. You can, b) acknowledge the failure, assign blame, or c) you can acknowledge the failure, make every effort to learn from it, and share the learning broadly. Innovative companies are above all, learning organizations. They realize that the degree of learning is directly related to the degree of open acknowledgment of the failed effort, and what happens to those associated with the "failure" says everything about who ventures forth in the future.

Unleashing an innovative climate has little to do with sending employees to rah-rah creativity seminars. It has more to do with how "innovative activity" is looked upon by management - the emphasis it is given, the role it takes in the organization's collective conscience, and people's views of what behaviors management genuinely expects.

Climate is the "feeling in the air" that you get when you visit a company. That climate is created by practices, procedures, and rewards. If the climate is favorable for innovation, you will sense that everyone is eager for the organization's advancement - to reach a milestone that has never been met; in other words advancing toward a specific stretch goal, whether it's a new product, a new business model, or opening a new market. The organization is in a state of becoming, rather than a state of being. It is creating the future rather than managing the past.

The organization with a favorable climate for innovation is one that provides the context for people to collaborate in groups, teams, divisions, and departments without boundaries or fear. And since innovation is really a process of problem-solving, this informal networking can't be limited only to internal sources. A team of researchers at Rensselaer Polytechnic Institute (RPI) in Troy, N.Y., conducted extensive field interviews with the teams involved in such breakthrough projects as GE's digital X-ray, Texas Instrument's digital light projector, GM's hybrid vehicle, IBM's silicon-germanium devices, and DuPont's biodegradable polymer. The research found that informal networks were critical in all 11 of the breakthrough projects. The networks were not confined to the R&D community, but operated between R&D and the business units, and between R&D and outside constituents: customers, suppliers and governmental agencies. These contacts helped give early validation to the idea's potential and generate political and financial support. They also helped to provide access to scarce resources, friendly customers, and government funding.

The new century promises to bring more change, more complexity and more competition. The expectations of customers and Wall Street will continue to rise. But companies that pay attention to strengthening this core competency have nothing to fear - and everything to gain.

Robert B. Tucker is president of The Innovation Resource, and an internationally recognized leader in the field of innovation. Formerly an adjunct professor at the University of California, Los Angeles, Tucker has been a consultant and keynote speaker since 1986. Clients include over 200 of the Fortune 500 companies as well as clients in Europe, the Americas, Asia-Pacific, and Australia. He frequently contributes to publications such as the Journal of Business Strategy, Strategy & Leadership, and Harvard Management Update. He has appeared on PBS, CBS News, and was a featured guest on the CNBC series The Business of Innovation. Learn more about Robert's latest work, Innovation is Everybody's Business, at:

Article Source:

Competency Modelling

Many organisations today are using competency modelling to link their HR processes

Competence is a standardized requirement for an individual to properly perform a specific job. It encompasses a combination of knowledge, skills and behavior utilized to improve performance. More generally, competence is the state or quality of being adequately or well qualified, having the ability to perform a specific role.

For instance, management competency includes the traits of systems thinking and emotional intelligence, and skills in influence and negotiation. A person possesses a competence as long as the skills, abilities, and knowledge that constitute that competence are a part of them, enabling the person to perform effective action within a certain workplace environment. Therefore, one might not lose knowledge, a skill, or an ability, but still lose a competence if what is needed to do a job well changes.

What Is A Competency Model? A Competency Model describes the competencies required to perform effectively in particular roles. This set of competencies is then used as standards against which to: - Select new staff Develop staff Evaluate the on-going performance of staff in these roles.

Competency Models enable one set of standards to be applied across the full range of human resource processes. This provides a common language and understanding and a consistency when assessing individual performance whether for the purpose of selection, development or performance management.

Components of a Competency Framework A competency framework consists of 3 main parts:-Behavioural indicators Competencies Competency clusters.

Behavioural Indicators: These are examples of behaviours that would be observed when someone demonstrates competence. They are the building blocks of the competency framework. For example behavioural indicators for the competency "Teamwork Work and Collaboration" are: Identifies when team members need support and provide it. Shares knowledge and information willingly with others. Collaborates effectively in meetings and informal interactions.

A Competency: This is a set of behaviours, which demonstrates that a person has the abilities, knowledge, skills and personal attributes to do the job competently.

The best way to describe competencies is to use behavioural language that describes the actions needed to achieve the organisation's goals. For example the competency "Teamwork" is described as "Works with others to cooperatively accomplish objectives".

Competency Clusters: These are individual competencies that are grouped into competency clusters. For example the competency "Teamwork" forms part of the competency cluster "Working With Others". Other competencies that would form part of this cluster are, "Influencing and Persuading", "Building Relationships", "Managing Others", etc.

Here is an example of a few of the behavioural indicators associated with the competency "Customer Service" which is part of the "Working With Others" competency cluster.

Customer Service Recognising and understanding customers' needs and delivering in a manner that exceeds customers' expectations.

Behavioural Indicators Listens to and values customers' needs, suggestions and feedback.

Develops and maintains positive, constructive relationships with customers.

Exerts a high level of effort to meet customers' needs in a timely manner

AssessSystems has a Competency Library consisting of a comprehensive set of commonly used workplace competencies and behavioural indicators. The Library is used to develop specific competency models for all jobs within an organisation. The number of competencies in a specific model varies. Usually a competency model will consist of a set of 8 -- 12 competencies per job role.

Read also Article Source

Tuesday, July 20, 2010

Mergers and Acquisition - A Case Study and Analysis of HP-Compaq Merger

Brief Description

The following is a brief description of the two companies:


It all began in the year 1938 when two electrical engineering graduates from Stanford University called William Hewlett and David Packard started their business in a garage in Palo Alto. In a year's time, the partnership called Hewlett-Packard was made and by the year 1947, HP was incorporated. The company has been prospering ever since as its profits grew from five and half million dollars in 1951 to about 3 billion dollars in 1981. The pace of growth knew no bounds as HP's net revenue went up to 42 billion dollars in 1997. Starting with manufacturing audio oscillators, the company made its first computer in the year 1966 and it was by 1972 that it introduced the concept of personal computing by a calculator first which was further advanced into a personal computer in the year 1980. The company is also known for the laser-printer which it introduced in the year 1985.


The company is better known as Compaq Computer Corporation. This was company that started itself as a personal computer company in the year 1982. It had the charm of being called the largest manufacturers of personal computing devices worldwide. The company was formed by two senior managers at Texas Instruments. The name of the company had come from-"Compatibility and Quality". The company introduced its first computer in the year 1983 after at a price of 2995 dollars. In spite of being portable, the problem with the computer was that it seemed to be a suitcase. Nevertheless, there were huge commercial benefits from the computer as it sold more than 53,000 units in the first year with a revenue generation of 111 million dollars.

Reasons for the Merger

A very simple question that arises here is that, if HP was progressing at such a tremendous pace, what was the reason that the company had to merge with Compaq? Carly Fiorina, who became the CEO of HP in the year 1999, had a key role to play in the merger that took place in 2001. She was the first woman to have taken over as CEO of such a big company and the first outsider too. She worked very efficiently as she travelled more than 250,000 miles in the first year as a CEO. Her basic aim was to modernize the culture of operation of HP. She laid great emphasis on the profitable sides of the business. This shows that she was very extravagant in her approach as a CEO. In spite of the growth in the market value of HP's share from 54.43 to 74.48 dollars, the company was still inefficient. This was because it could not meet the targets due to a failure of both company and industry. HP was forced to cut down on jobs and also be eluded from the privilege of having Price Water House Cooper's to take care of its audit. So, even the job of Fiorina was under threat. This meant that improvement in the internal strategies of the company was not going to be sufficient for the company's success. Ultimately, the company had to certainly plan out something different. So, it was decided that the company would be acquiring Compaq in a stock transaction whose net worth was 25 billion dollars. Initially, this merger was not planned. It started with a telephonic conversation between CEO HP, Fiorina and Chairman and CEO Compaq, Capellas. The idea behind the conversation was to discuss on a licensing agreement but it continued as a discussion on competitive strategy and finally a merger. It took two months for further studies and by September, 2001, the boards of the two companies approved of the merger. In spite of the decision coming from the CEO of HP, the merger was strongly opposed in the company. The two CEOs believed that the only way to fight the growing competition in terms of prices was to have a merger. But the investors and the other stakeholders thought that the company would never be able to have the loyalty of the Compaq customers, if products are sold with an HP logo on it. Other than this, there were questions on the synchronization of the organization's members with each other. This was because of the change in the organization culture as well. Even though these were supposed to serious problems with respect to the merger, the CEO of HP, Fiorina justified the same with the fact that the merger would remove one serious competitor in the over-supplied PC market of those days. She said that the market share of the company is bound to increase with the merger and also the working unit would double. (Hoopes, 2001)

Advantages of the Merger

Even though it seemed to be advantageous to very few people in the beginning, it was the strong determination of Fiorina that she was able to stand by her decision. Wall Street and all her investors had gone against the company lampooning her ideas with the saying that she has made 1+1=1.5 by her extravagant ways of expansion. Fiorina had put it this way that after the company's merger, not only would it have a larger share in the market but also the units of production would double. This would mean that the company would grow tremendously in volume. Her dream of competing with the giants in the field, IBM would also come true. She was of the view that much of the redundancy in the two companies would decrease as the internal costs on promotion, marketing and shipping would come down with the merger. This would produce the slightest harm to the collection of revenue. She used the ideas of competitive positioning to justify her plans of the merger. She said that the merger is based on the ideologies of consolidation and not on diversification. She could also defend allegations against the change in the HP was. She was of the view that the HP has always encouraged changes as it is about innovating and taking bold steps. She said that the company requires being consistent with creativity, improvement and modification. This merger had the capability of providing exactly the same. (Mergers and Acquisitions, 2010)

Advantages to the Shareholders

The following are the ways in which the company can be advantageous to its shareholders:

Unique Opportunity: The position of the enterprise is bound to better with the merger. The reason for the same was that now the value creation would be fresh, leadership qualities would improve, capabilities would improve and so would the sales and also the company's strategic differentiation would be better than the existing competitors. Other than this, one can also access the capabilities of Compaq directly hence reducing the cost structure in becoming the largest in the industry. Finally, one could also see an opportunity in reinvesting.

Stronger Company: The profitability is bound to increase in the enterprise, access and services sectors in high degrees. The company can also see a better opportunity in its research and development. The financial conditions of the company with respect to its EBIT and net cash are also on the incremental side.

Compelling Economics: The expected accumulation in IIP gains would be 13% in the first financial year. The company could also conduct a better segmentation of the market to forecast its revenues generation. This would go to as much as 2 and a half billion dollars of annual synergy.

Ability to Execute: As there would be integration in the planning procedures of the company, the chances of value creation would also be huge. Along with that the experience of leading a diversified employee structure would also be there. (HP to buy Compaq, 2001)
Opposition to the Merger

In fact, it was only CEO Fiorina who was in favor of going with the merger. This is a practical application of Agency problem that arises because of change in financial strategies of the company owners and the management. Fiorina was certain to lose her job if the merger didn't take effect. The reason was that HP was not able to meet the demand targets under her leadership. But the owners were against the merger due to the following beliefs of the owners:

The new portfolio would be less preferable: The position of the company as a larger supplier of PCs would certainly increase the amount of risk and involve a lot of investment as well. Another important reason in this context is that HP's prime interest in Imaging and Printing would not exist anymore as a result diluting the interest of the stockholders. In fact the company owners also feel that there would be a lower margin and ROI (return on investment).

Strategic Problems would remain Unsolved: The market position in high-end servers and services would still remain in spite of the merger. The price of the PCS would not come down to be affordable by all. The requisite change in material for imaging and printing also would not exist. This merger would have no effect on the low end servers as Dell would be there in the lead and high-end servers either where IBM and Sun would have the lead. The company would also be eluded from the advantages of outsourcing because of the surplus labor it would have. So, the quality is not guaranteed to improve. Finally, the merger would not equal IBM under any condition as thought by Fiorina.

Huge Integrated Risks: There have been no examples of success with such huge mergers. Generally when the market doesn't support such mergers, don't do well as is the case here. When HP could not manage its organization properly, integration would only add on to the difficulties. It would be even more difficult under the conditions because of the existing competitions between HP and Compaq. Being prone to such risky conditions, the company would also have to vary its costs causing greater trouble for the owner. The biggest factor of all is that to integrate the culture existing in the two companies would be a very difficult job.

Financial Impact: This is mostly because the market reactions are negative. On the other hand, the position of Compaq was totally different from HP. As the company would have a greater contribution to the revenue and HP being diluted at the same time, the problems are bound to develop. This would mean that drawing money from the equity market would also be difficult for HP. In fact this might not seem to be a very profitable merger for Compaq as well in the future.

The basic problem that the owners of the company had with this merger was that it would hamper the core values of HP. They felt that it is better to preserve wealth rather than to risk it with extravagant risk taking. This high risk profile of Fiorina was a little unacceptable for the owners of the company in light of its prospects.

So, as far as this merger between HP and Compaq is concerned, on side there was this strong determination of the CEO, Fiorina and on the other side was the strong opposition from the company owners. This opposition continued from the market including all the investors of the company. So, this practical Agency problem was very famous considering the fact that it contained two of the most powerful hardware companies in the world. There were a number of options like Change Management, Economic wise Management, and Organizational Management which could be considered to analyze the issue. But this case study can be solved best by a strategy wise analysis. (HP-Compaq merger faces stiff opposition from shareholders stock prices fall again, 2001)

Strategic Analysis of the Case

Positive Aspects

A CEO will always consider such a merger to be an occasion to take a competitive advantage over its rivals like IBM as in this case and also be of some interest to the shareholders as well. The following are the strategies that are related to this merger between HP and Compaq:

* Having an eye over shareholders' value: If one sees this merger from the eyes of Fiorina, it would be certain that the shareholders have a lot to gain from it. The reason for the same is the increment in the control of the market. So, even of the conditions were not suitable from the financial perspective, this truth would certainly make a lot of profits for the company in the future.

* Development of Markets: Two organizations get involved in mergers as they want to expand their market both on the domestic and the international level. Integration with a domestic company doesn't need much effort but when a company merges internationally as in this case, a challenging task is on head. A thorough situation scanning is significant before putting your feet in International arena. Here, the competitor for HP was Compaq to a large degree, so this merger certainly required a lot of thinking. Organizations merge with the international companies in order to set up their brands first and let people know about what they are capable of and also what they eye in the future. This is the reason that after this merger the products of Compaq would also have the logo of HP. Once the market is well-known, then HP would not have to suffer the branding created by Compaq. They would be able to draw all the customers of Compaq as well.

* Propagated Efficiencies: Any company by acquiring another or by merging makes an attempt to add to its efficiencies by increasing the operations and also having control over it to the maximum extent. We can see that HP would now have an increased set of employees. The only factor is that they would have to be controlled properly as they are of different organizational cultures. (Benefits of Mergers:, 2010)

* Allowances to use more resources: An improvised organization of monetary resources, intellectual capital and raw materials offers a competitive advantage to the companies. When such companies merge, many of the intellects come together and work towards a common mission to excel with financial profits to the company. Here, one can't deny the fact that even the top brains of Compaq would be taking part in forming the strategies of the company in the future.

* Management of risks: If we particularly take an example of this case, HP and Compaq entering into this merger can decrease the risk level they would have diversified business opportunities. The options for making choice of the supply chain also increase. Now even though HP is a pioneer in inkjet orienting, it would not have to use the Product based Facility layout which is more expensive. It can manage the risk of taking process based facility layout and make things cheaper. Manufacturing and Processing can now be done in various nations according to the cost viability as the major issue.

* Listing potential: Even though Wall Street and all the investors of the company are against the merger, when IPOs are offered, a development will definitely be there because of the flourishing earnings and turnover value which HP would be making with this merger.

* Necessary political regulations: When organizations take a leap into other nations, they need to consider the different regulations in that country which administer the policies of the place. As HP is already a pioneer in all the countries that Compaq used to do its business, this would not be of much difficulty for the company. The company would only need to make certain minor regulations with the political parties of some countries where Compaq was flourishing more than HP.

* Better Opportunities: When companies merge with another company, later they can put up for sale as per as the needs of the company. This could also be done partially. If HP feels that it would not need much of warehouse space it can sell the same at increased profits. It depends on whether the company would now be regarded a s a make to stock or a make to order company.

* Extra products, services, and facilities: Services get copyrights which enhances the level of trade. Additional Warehouse services and distribution channels offer business values. Here HP can use all such values integrated with Compaq so as to increase its prospects. (Berry, 2010)

Negative Aspects

There are a number of mergers and acquisitions that fail before they actually start to function. In the critical phase of implementation itself, the companies come to know that it would not be beneficial if they continue as a merger. This can occur in this merger between HP and Compaq due to the following reasons.

Conversations are not implemented: Because of unlike cultures, ambitions and risk profiles; many of the deals are cancelled. As per as the reactions of the owners of HP, this seems to be extremely likely. So, motivation amongst the employees is an extremely important consideration in this case. This requires an extra effort by the CEO, Fiorina. This could also help her maintain her position in the company.

Legal Contemplations: Anti-competitive deals are often limited by the rules presiding over the competition rules in a country. This leads to out of order functioning of one company and they try to separate from each other. A lot of unnecessary marketing failures get attached to these conditions. If this happens in this case, then all that money which went in publicizing the venture would go to be a waste. Moreover, even more would be required to re-promote as a single entity. Even the packaging where the entire inventory from Compaq had the logo of HP would have to be re-done, thus hampering the finance even further. (Broc Romanek, 2002)

Compatibility problems: Every company runs on different platforms and ideas. Compatibility problems often occur because of synchronization issues. In IT companies such as HP and Compaq, many problems can take place because both the companies have worked on different strategies in the past. Now, it might not seem necessary for the HP management to make changes as per as those from Compaq. Thus such problems have become of greatest concern these days.

Fiscal catastrophes: Both the companies after signing an agreement hope to have some return on the money they have put in to make this merger happen and also desire profitability and turnovers. If due to any reason, they are not able to attain that position, then they develop a abhorrence sense towards each other and also start charging each other for the failure.

Human Resource Differences: Problems as a result of cultural dissimilarities, hospitality and hostility issues, and also other behavior related issues can take apart the origin of the merger.

Lack of Determination: When organizations involve, they have plans in their minds, they have a vision set; but because of a variety of problems as mentioned above, development of the combined company to accomplish its mission is delayed. Merged companies set the goal and when the goal is not accomplished due to some faults of any of the two; then both of them develop a certain degree of hatred for each other. Also clashes can occur because of bias reactions. (William, 2008)

Risk management failure: Companies that are involved in mergers and acquisitions, become over confident that they are going to make a profit out of this decision. This can be seen as with Fiorina. In fact she can fight the whole world for that. When their self-confidence turns out into over-confidence then they fail. Adequate risk management methods should be adopted which would take care of the effects if the decision takes a downturn. These risk policies should rule fiscal, productions, marketing, manufacturing, and inventory and HR risks associated with the merger.

Strategic Sharing


Hp and Compaq would now have common channels as far as their buying is concerned. So, the benefits in this concern is that even for those materials which were initially of high cost for HP would now be available at a cheaper price. The end users are also likely to increase. Now, the company can re frame its competitive strategy where the greatest concern can be given to all time rivals IBM. The advantages of this merger in the field of marketing can be seen in the case of shared branding, sales and service. Even the distribution procedure is likely to be enhanced with Compaq playing its part. Now, the company can look forward to cross selling, subsidization and also a reduced cost.

The foremost advantage in this area is that in the location of raw material. Even the processing style would be same making the products and services synchronized with the ideas and also in making a decent operational strategy. As the philosophical and mechanical control would also be in common, the operational strategy would now be to become the top most in the market. In this respect, the two companies would now have co-production, design and also location of staff. So, the operational strategy of HP would now be to use the process based facility layout and function with the mentioned shared values.

The technical strategy of the company can also be designed in common now. There is a disadvantage from the perspective of the differentiation that HP had in the field of inkjet printers but the advantages are also plentiful. With a common product and process technology, the technological strategy of the merged company would promote highly economical functioning. This can be done through a common research and development and designing team.

The buying strategy of the company would also follow a common mechanism. Here, the raw materials, machinery, and power would be common hence decreasing the cost once again. This can be done through a centralized mechanism with a lead purchaser keeping common policies in mind. Now Hp would have to think with a similar attitude for both inkjet printers as well as personal computers. This is because the parameters for manufacturing would also run on equal grounds.

This is the most important part of the strategies that would be made after the merger. The companies would have common shareholders for providing the requisite infrastructure. The capital source, management style, and legislation would also be in common. So, the infrastructure strategies would have to take these things into account. This can be done by having a common accounting system. HP does have an option to have a separate accounting system for the products that it manufactures but that would only arouse an internal competition. So, the infrastructural benefits can be made through a common accounting, legal and human resource system. This would ensure that the investment relations of the company would improve. None of the Compaq investors would hesitate in making an investment if HP follows a common strategy.

HP would now have to ensure another fact that with this merger they would be able to prove competitors to the present target and those of competitors like IBM as well. Even the operations and the output market needs to be above what exists at present. The company needs to ensure that the corporate strategy that it uses is efficient enough to help such a future. The degree of diversification needs to be managed thoroughly as well. This is because; the products from the two companies have performed exceptionally well in the past. So, the most optimum degree of diversification is required under the context so that the company is able to meet the demands of the customers. This has been challenged by the owners of HP but needs to be carried by the CEO Fiorina. (Bhattacharya, 2010)

I am a pre final year student at the Indian Institute of Information Technology and Management, Gwalior, India pursuing a five year integrated course (dual degree) leading to the award of B.Tech (Information Technology) and MBA. I am currently in the 9th Semester. ABV-IIITM Gwalior, a Deemed University, is an apex Institute, established by the ministry of HRD (Human Resource Development), Government of India.

The competitive environment at my Institute coupled with my inherent trait of trying to learn something new from each experience has made me come a long way in these four years. I have not only learnt to work under pressure and intense competition with some of the brightest students in the country but have also worked with an esteemed KPO called CBI Solutions in the meanwhile. This has given me the experience to get exposed to some of the most challenging marketing traits in the business. Moreover, I have been awarded first rank for IT and Entrepreneurship at the end of my 7th Semester.

I have been privileged to work at Polaris Retail Infotech Limited, Gurgaon from May to July'08. This taught me the practical application of relationship marketing as I saw the preparation of customer interfaces through their software Smart Store. This is visible at billing counters at retail stores of the fame of Shopper's Stop. Also, I've been in the editorial board of my college magazine, La Vista for the past 3 years and eventually I hold the responsibility of the Chief Editor.

Article Source

Other HP Compaq merger case study analysis 1

Other HP Compaq merger case study analysis 2

How to Design an Effective Performance Management System

How many times have you heard a manager or business owner say, "Our people are our greatest asset?" In many organizations, the employees are treated this way. For every company that walks the walk, there is a company that only talks the talk. In these companies, what the manager should really say is, "I am the most important person in this company and my people know that I think so."

The employer/employee relationship takes on many forms. We interact daily in the workplace and often in social settings outside of the office. Through the frequency of our interaction we come to feel that we know our employees and that they know us as well.

Consider how much time you spend with your direct reports in open communication regarding their work life in a setting where they have my uninterrupted time. My guess is that most managers spend little time providing for such time with their employees and overestimate the quality time that they spend with their direct reports. We are going to examine the importance of creating time for open communication in today's business climate and how it can be used to change or further a company culture based upon results.

Structure, communication and accountability are vital to the success of any organization. Structure provides your staff with a basic understanding of what to do and how to do it in an organized fashion. Accountability ensures that responsibilities are met on time with quality results. Communication allows for the various parts of your company to work together seamlessly to meet your customer or client needs.

An effective performance management system will employ a simple structure that both the manager and direct reports honor as a commitment to be kept and meetings should be missed only in extreme situations. Most performance management practices center around a year-end review that affects prior bonus and future pay. The employee often feels like they are judged solely on the last 90 days of their performance. The manager struggles to provide an objective assessment as he or she finds it very difficult to look at the entire year objectively as the recent past is front and center.

Let's start by rethinking the whole process. We want to focus less on having a cursory meeting where we cram an entire year of an employees' work into a one-hour meeting. We want to focus more on establishing an effective mentoring process where open and honest feedback flows between both the manager and employee on a regular basis. Individual monthly meetings with each direct report should be the corner stone of this process. Employees should prepare for the meeting by providing a description of their last 30 days. This document should be provided in advance of the meeting and include their failures, successes, and plans for the next 30 days. The manager should be prepared to review the document, be mentally present in the meeting, accept no phone calls or interruptions, and be prepared to help with their failures, coach through their plans and celebrate their successes. If you notice a problem, discuss it. Don't leave anything unturned.

The next step in the process is a quarterly meeting. This meeting is best conducted over a couple of sessions and is a part of a formal review process. Your direct report should prepare for this meeting by answering a few questions in writing. You want to find out what the person feels he or she did well over the last 90 days and where improvement could occur. You want to find out what the person is particularly proud of with regard to his or her performance. In addition, you want to know if and how the employee is struggling. You should have the employee submit this prior to the meeting so that you can review and thoughtfully prepare your responses.

The second step of this quarterly meeting occurs as you tell the employee, verbally and in writing, what you have found to be the positive and negative points of their performance. Provide specific treatment to what improvements you would like to see in the negative performance and let the person know how serious the situation is as it relates to their job security. The goal here is open communication of your expectations with no surprises. The employee should respond to your assessment in writing with a short but simple improvement plan.

We work closely with our clients to help them improve their performance management processes. As with most business processes, follow through is critical. Do not adjourn any monthly meeting or quarterly review without scheduling the next one. Our clients derive value from this process through their commitment to their employees and cancel meetings only in the event of a critical conflicting appointment.

Phil Herron is the President and Director of Risk Management at Four Point HR, a Professional Employer Organization (PEO) based in Atlanta, GA. As a PEO, the company enables small businesses to cost-effectively outsource the management of employee benefits as well as human resources, payroll and workers' compensation. Learn more about these four points of service at

Article Source

Phil Herron - EzineArticles Expert Author

A Guide to Performance Management

Improve your performance management system and you'll soon see an increase in productivity, streamlined procedures, increased accountability and more commitment from your employees.

One of the most important aspects of great management is to build a good relationship with your employees, be as honest as you can with your staff, if they feel they can talk to you openly and trust you then it's more likely you'll be told about any issues or problems in plenty of time to do something about it. Staff will feel comfortable about providing information and respect your decisions.

Staff morale and motivation is paramount, if you see someone working extra hard or achieving consistently good results then let them know you have noticed and congratulate them on their success. A pat on the back can work wonders to employees' sense of worth and motivation.

You need to have an effective performance management system in place to really make it successful. It doesn't have to be anything too complicated but it is a process that will only work if it is organized and regularly carried out. Keep it nice and simple and your staff will appreciate the chance to be honest about the way they feel at work, and take any changes or moves much more readily. Overload them with complicated forms and multiple paperwork and you will only get grumbles. It can be effective whist still being friendly and informal.

Performance management is all about building up trusting relationships and motivating your staff. Focus on their strengths and positive aspects and don't spend too much time pointing out weaker issues, this will only lead to employees resenting or dreading these discussions and becoming disheartened and demotivated. Also try and keep any disciplinary issues separate.

Remember that this isn't only about what employees can give you, you also have to ensure they are happy in their current role, identify any issues that may be troubling them and consider any further training or qualifications that will benefit and raise their self esteem. This will strengthen the working relationship and ensure your staff feel loyal to the company.

Performance management reviews help employees have a better understanding of what is expected from them in terms of work load and performance. There are a lot of issues at work that are caused by misunderstanding or lack of communication, an effective performance management program can minimize these misunderstandings and enable things to run more smoothly.

They provide the perfect opportunity for your employees to bring up any problems or questions they have and haven't had the confidence to raise earlier. It can also be a time when employees ask about further training or qualifications they might be interested in, or other aspects they may feel could improve their performance.

Once the review is complete then do an evaluation of the review itself. Every company is different in the way it operates so structure your review to suit your company culture and style. Could the review have gone more smoothly? Can you identify anything that could have been done differently? There is always room for improvement and a positive performance will benefit both you and your employees.

A performance review is not only about the past year, it should also plan for the next and an effective review will make it clear to your employee how they fit into the team and contribute to the company. Recognizing achievements and giving them a pat on the back when it's due will encourage a good working relationship and ensure your staff are motivated and happy.

Generally there is no standard package with an RPO service due to every company having different needs and requirements. Find out as much as you can about recruitment services online where there's lots of information and tips on how to find one to suit you. Every solution is modified to the individual situation, aims and needs of the clients. If you are looking for effective methods to make your organization run more smoothly than ever then find out more about how recruitment services operate and how they can help you.

Andrea Watkins writes articles for Kenexa, a leading provider of effective performance management solutions that helps businesses and organizations worldwide enhance employee engagement. Their suite of compensation management tools help managers aligns compensation directly to performance, allowing budgets allocation and utilizations. Make use of their succession planning tools to identify and develop existing and future talent within your organization.

Article Source

Sunday, July 18, 2010

Michael Porter's Competitive Advantage

It's important to analyze these five forces and their affect on companies we want to invest in. The Porter Five Forces Analysis will give you a good explanation for the profitability of an industry, and the firms within it. If you want to know why a company is able, or unable, to make a decent profit, this is the first analysis you should do.

The Five Competitive Forces That Shape Strategy

Since 1922, The Harvard Business Review has been published as a monthly digest of research-based articles written specifically for high ranking business practitioners.

It is an esteemed publication and is revered by the icons of global business management and is highly regarded as being quite authoritative in scope by the leaders in the fields of academic research as well as upper level managers, executives, and management consultants of a wide array of major industries.

Its worldwide English-language circulation is 240,000, and there are 11 licensed editions of the magazine, including two Chinese-language editions, a German edition, a Brazilian (Portuguese-language) edition, and an English-language South Asia edition.

In it's January 2008 Special Edition issue, which I had the pleasure of reading on a long flight recently, there is an article that speaks of how a business, any business, can increase profitability if they understand the role of competition in its strategic approach. The article, The Five Competitive Forces That Shape Strategy,is written by renowned Harvard business expert, Professor Michael E. Porter. Dr. Porter's credentials are unsurpassed and is widely recognized as a leading authority on competitive strategy and the competitiveness and economic development .

Real Estate, being a business industry, most assuredly can benefit from the understanding and implementation of the precepts Porter details in the article.

Porter's basis for the article is that a business that is aware of the "five forces" will be much better suited to understand the structure of its industry and can create a position for itself that is more profitable and less vulnerable to attack.

In looking at the Five Competitive Forces That Shape Strategy we can see how appropriate these strategies are from the perspective of a real estate professional.

In understanding his theory, it can be concluded that the National Association of Realtors may not be working in the best interest of the real estate industry. As the NAR is NOT the real estate industry, it is quite odd that a trade association or lobbying unit of an industry is defining the national policy and procedural strategy of the real estate business. In its ongoing attempt to fulfill its stated core purpose of helping its "members become more profitable and successful", NAR seems to believe that the best course of action for establishing its mission is to stifle or eliminate competition for its rank and file members.

This may prove to not be the best plan. The job of the business strategist is to understand and cope with competition, not seek to eliminate it.

Eliminating rivals is a risky strategy. A profit windfall from removing today's competitors often attracts new competitors and backlash from customers and suppliers. The competition in the real estate industry that is sparked by new arrivals like Zillow, Redfin, Trulia and the like can actually help profitability for all involved.

The strongest competitive force or forces determine the profitability of an industry and become the most important to strategy formulation. The most salient force, however, is not always obvious

Let's take a look at how the Five Competitive Forces That Shape Strategy can impact the real estate industry as we know it today.

Threat of Entry

Porter makes an excellent point relative to how competition can increase the success and profitability of an industry. If you have to become better at what you do to stave off being overtaken by competition, the consumer truly benefits. The diversification and implementation of technologies forces you to up your game. New entrants to an industry bring new capacity and a desire to gain market share that puts pressure on prices, costs, and the rate of investment necessary to compete. Particularly when new entrants are diversifying from other markets, they can leverage existing capabilities and cash flows to shake up competition, as Pepsi did when it entered the bottled water industry, Microsoft did when it began to offer internet browsers, and Apple did when it entered the music distribution business.

The Power of Suppliers

Renamed in our business to read the Power of Sellers, details how the entity that is in control of the "product" is not reliant on the industry to drive its revenue. This is very important when you realize in an up or down market, it is the Seller who has the sole power to set market prices and to set the level of inventory of a product.

The Power of Buyers

As can be expected, the Buyer is the antithesis of the Seller. There is no such thing as a low ball offer. No reason for anyone to think that. The Buyer is exerting their power in the transaction just as the Seller exerts theirs by setting the price. It's business people!! Buyers can capture more value by forcing down prices, demanding better quality or more service (thereby driving up costs), and generally playing industry participants off against one another, all at the expense of industry profitability. Buyers are powerful if they have negotiating leverage relative to industry participants, especially if they are price sensitive, using their clout primarily to pressure price reductions.

The Threat of Substitutes

When the threat of substitutes is high, industry profitability suffers. Substitute products or services limit an industry's profit potential by placing a ceiling on prices. If an industry does not distance itself from substitutes through product performance, marketing, or other means, it will suffer in terms of profitability, and often growth potential. It's not competition that hurts business but rather the perceived threat. If you find Redfin or any of a number of newcomers to the industry to be a threat then you are looking at things the wrong way. What you must realize is that the obsolescence and perceived antiquity of the current real estate industry business model has made the industry ripe for the invasion of substitution and of course...advancement. A substitute performs the same or a similar function as an industry's product by a different or better means.

Rivalry Among Existing Competitors

Rivalry is especially destructive to profitability if it gravitates solely to price because price competition transfers profits directly from an industry to its customers. If it were just a matter of offering a cheaper service or product then perhaps the Redfin's of the world would indeed be a problem for the existing real estate industry business model. However in reviewing what Redfin, Zillow and many new entrants to the business offer the consumer, there are many features, and amenities afforded a consumer that are valuable far in excess of just price.

Competition on dimensions other than price, on product features, support services, delivery time, or brand image, for instance, is less likely to erode profitability because it improves customer value. Rivalry can be positive sum, or actually increase the average profitability of an industry, when each competitor aims to serve the needs of different customer segments, with different mixes of price, products, services, features, or brand identities. Such competition can not only support higher average profitability but also expand the industry, as the needs of more customer groups are better met. Since the entry of new competitors or substitutes is not solely based upon price, then their entry should be applauded and heralded, not met with disquietude.

You are licensed by the state, you are an independent contractor under a broker, or you may be a broker. Why is the NAR running your business and telling you how to conduct your affairs? They are a lobbying organization whose interests may not necessarily mirror your own.

If the NAR does not have your business plan, should you be managing your affairs according to what they say?

I often get responses wherein agents across the Country want to debate substantiated fact with rhetoric opinion. This time, the facts may be hard to debate. They definitely can not be refuted.

The subject of this post, Dr. Porter's article the Five Competitive Forces That Shape Strategy, deserves much more study and attention than I can write here. I urge you to read his article in its entirety and try your best to comprehend and implement the precepts he describes to meet the challenge of today's real estate business model.

It may very well be the catalyst that allows you to turn from conventional wisdom and embrace the future of real estate.

About the Author Barry Cunningham is one half of the B&B Crew who are the hosts of Real Estate Radio USA. Real Estate Radio USA. is an opinionated, provocative, informative and entertaining talk radio show about all that is real estate and how to promulgate wealth through real estate investing.

Real Estate Radio USA is broadcast daily live worldwide at 4PM-6PM at We invite you to listen in and participate in lively and spirited discussion. Tune into Real Estate Radio USA .

Article Source

The Toyota Way- 14 Management Principles

Toyota's growth over the last decade is a blueprint for winning. They've increased their world market share and are now the dominate force in the automotive industry. They own the hybrid, the fuel economy and luxury markets, they have the highest resale value, and they're the most reliable cars on the road. It would seem that their strategy is working. These are 14 management principles owned by Toyota. Implementing this, you could achieve world class organization and increase market share and the final results bring you financial profitability.

The Toyota Way - Underlying Principles of the Toyota Production System

The underlying principles of the Toyota Production System have been called the Toyota Way. These principles revolutionized the manufacturing industry and helped develop Toyota into the company it is today.

The Toyota Way has been outlined by Toyota as continuous improvement, and respect for people. Continuous improvement encompasses challenge, kaizen and genchi genbutsu. Challenge means forming a long term vision and meeting challenges with courage and creativity to realize dreams. Kaizen is improving business operations continuously and always striving for innovation and evolution. Genchi genbutsu is going to the source to find the facts to make correct decisions. Respect for people encompasses respect and teamwork. Respect is for respecting others, making efforts to understand each other, take responsibility and doing the best to build mutual trust. Teamwork is stimulating personal and professional growth, share the opportunities of development and maximize individual and team performance.

Outside observers of Toyota and summarized the Toyota Way principles a little differently. They see the Toyota Way as basing management decisions on long term philosophy even at the expense of short term financial goals, the right process will produce the right results, add value to the organization by developing your people and partners, continuously solving root problems drives organizational learning.

The right process encompasses creating continuous process flow to bring problems to the surface, use the pull system to avoid overproduction, level out the workload, build a culture of stopping to fix problems to get quality right from the first, standardized tasks are the foundation for continuous improvement and employee empowerment, using visual control so no problems are hidden and using only reliable, thoroughly tested technology that serves your people and processes.

Adding value to the organization encompasses growing leaders that thoroughly understand the work, live the philosophy and teach it to others, developing exceptional people and teams that follow your company's philosophy and respecting your extended network of partners and suppliers by challenging them and helping them improve.

The principle of continuously solving root problems encompasses seeing for yourself to thoroughly understand a situation, making decisions slowly by consensus, thoroughly considering all options and implementing decisions rapidly, and becoming a learning organization through relentless reflection and continuous improvement.

Instead of people resigning themselves to problems, becoming hostage to routine and no problem solving, the Toyota Way goes back to the basics exposing the real significance of problems and making fundamental improvements. This can be seen in the Toyota Production System.

Drive a piece of this inventive and ingenious company by visiting Iowa City Toyota at Billion Auto.

Article Source: