IB Business and Management Summary

Chapter 2: Human Resources

2.1 Human Resource Planning2.2 Organizational Structure2.3 Communication2.4 Leadership and Management2.5 Motivation2.6 Organizational and Corporate Culture2.7 Employer and Employee Relations2.8 Crisis Management and Contingency Planning

Unit 2.1: Human Resource Planning

IntroductionMany say that people are a firm’s most valuable resource and recruiting the right people helps businesses to achieve their aims and objectives. To do this, a firm requires human resource planning – preempting the future HR needs of the firm by looking at:

Historical data and trends Sale and income levels Labor turnover rates Demographic changes Technological changes

‘Human Resources’ refers to the management of people within an organization. This entails:

Workforce planning Recruitment, selection and induction Training and development Performance management and appraisals Staff promotion and relocation Reviewing remuneration Disciplinary and grievance procedures Employee welfare

Supply of Human Resources and Demographic ChangesThe supply of human resources in a country is affected by demographic changes, which are caused by changes in:

Net birth rate (the difference between births and deaths) – a higher birth rate means a larger supply of human resources

Net migration rate (the difference between immigrants and emigrants) – the effects is the same as above

Retirement age (the age at which can claim a pension) – if raised, the workforce will grow

Workforce flexibility (staff able to adapt to change) Women entering the workforce – will boost HR supply Mobility of Labour (the extent to which they can move locations and/or

jobs) – higher mobility creates higher supply

Labour MobilityLimitations (geographic):

Friends and family ties hold back movement for most Relocation is costly Language and cultural differences are limiting Fear of the unknown

Limitations (occupational): Younger workers are more confident and flexible Some workers are highly specialized and struggle to find jobs Employer discrimination

HR supply is also affected by: Internal workforce (existing employees) – if highly skilled and flexible,

the need to hire is lowered Cost of living – this may deter relocation Transport – accessible areas tend to attract workers Unemployment Rate

Population longevity can create an ageing population. Effects include: Increased dependent population – those out of working age who are

dependent on taxpayers Reduced labour mobility – with a greater amount of elderly (who tend

to be immobile) reduces international competitiveness Changing consumption patterns – a predominantly elderly population

creates opportunities to cater for their consumption Changing employment patterns – an ageing population means firms

are more likely to retain staff beyond retirement age due to labor shortage, some firms might even consider relocation (due to shortage)

Workforce PlanningThis is the process of anticipating the current and future demand for workers in an organization (short-term or long-term):

Short-term: existing and upcoming demand including hiring cover staff Long term: needs in the foreseeable future, e.g. Disney hired and

trained employees two years before the opening of Disneyland Hong Kong

Human resource needs requires consideration of labour demand, which depends on several factors:

Historical data, from which we can identify trends – e.g. labour turnover rates – if a drop is predicted in the next year, HR can begin recruitment

Flexibility and workloads, of staff helps determine demand – capable staff can handle increased workload and skilled workers may be able to be reassigned rather than hire a new employee to fill a position

Capital intensity, an automated business may be able to increase output without new workers by the use of capital goods

Work study, a measurement tool estimating the most efficient number of staff to complete a task

Derived demand, the need for labour in areas becoming increasingly popular

Natural wastage, when an old employees position isn’t filled

Before recruitment, managers should undertake job analysis, detailing: The skills and training required to do the job Qualifications and personal qualities required to do the job The rewards needed to recruit and retain the post holder

This document is useful later in recruitment and selection.

The main six (acceptable) reasons that people leave their jobs are indicated by the acronym CLAMPS:Recruitment and Selection

Labour – one of the four factors of production – is needed for the provision of any service. Therefore, hiring the right employees is vital as well as expensive and time consuming so it must be carried out effectively.

Job description: o Outlines details of job – what it entails and includes: job title, roles,

duties and responsibilitieso Usually flexible description to exploit workers’ skills

Person Specification:o Profiles the ideal candidate – qualities, skills and experiences soughto Personal attributes the candidate should possess

Advertisement:o Hours of work, rate of pay, benefits, contact and

deadline detailso A good advertisement will attract the best

candidates and considers the five ‘TRAPS’ to a good ad:

Candidate Application:o Application form – a standardized form o Curriculum Vitae – personal statement including education,

employment history, skills and qualificationso Cover letter – an introductory note written by the applicant

Selection Process:o A shortlist is created of the most suitable candidateso Interviews are held between the employer and the candidate – they

should be well planned, follow a structured approach and ask questions from the following categories (see what/not to do):

o Behaviour-based questions – explain an example of when…o Situational-based questions – hypothetical scenarios

o Testing (although time consuming) can determine a candidates suitability

The Recruitment Process1. A position becomes vacant2. Conduct a job analysis to determine the need to

hire a new employee3. Produce a job description and person

specification4. Advertise the vacant post5. Screen applications and shortlist candidates6. Interview shortlisted candidates7. Perform aptitude testing8. Check references of candidates9. Offer the position to the best candidate10.Sign the contract of employment11.Carry out the induction of the new recruit

o Psychometric tests – assesses personality, motivation and organization

o Aptitude tests – examining skills and abilities such as typingo Intelligence tests – calculate mental ability and general

knowledgeo Trade tests – specific skills such as news presenting

o References are contacted to ensure applicants have been truthfulo Contract of employment (to which employees are entitled by law) is

giveno Induction is undertaken to settle the new employee into the business

Alec Roger’s seven-point plan Munro-Fraser’s 5-fold grading systemPhysical make-up (appearance/manner) Impact on others; physicalityAttainments and qualifications Qualifications and trainingGeneral intelligence Innate abilities and aptitudesSpecialty skills Motivation and success rateInterests and hobbies Emotional adjustment – handle stressDisposition, outlook and temperamentCircumstances working hours

Internal and External RecruitmentInternal recruitment involves hiring people who are already part of a business to fill a vacant position – this often happens during restructuring. Internal posts are usually advertised within the organization.

External recruitment involves hiring new employees through:o Newspaper advertisingo Specialist trade publicationso Internet advertisingo Commercial employment

agencieso Headhunting (poaching)o University visitso Employee referralsAppraisals

What to do1. Prepare by researching the

organization and becoming familiar with the position

2. Dress appropriately the give a good first impression

3. Practice interview skills to appear confident

What not to do1. Be late, giving a bad first

impression2. Be critical of past

employees or the businesses current state

3. Falsify answers that way be uncovered eventually

Advantages Disadvantageso Cost effectiveo Less down-timeo Less risko Motivational

o Fewer applicantso Time consumingo No new ‘life’ to businesso Internal politics

Advantages Disadvantages

o New workerso Wider range of

experienceso Larger pool of

applicants

o Time consumingo Expansive

An appraisal is the formal assessment of an employee’s performance in fulfilling his or her job based on roles outlined in the job description. Reasons for appraisals include:

o Assess performance in line with targetso Assist staff with reflection and improvemento Provide opportunity for praiseo Identify barriers hindering performanceo Identify training needso Set new targets and goalso Aid professional development o Assess the suitability of pay rise and promotion

Essay AppraisalThe appraiser prepares a written statement about the employee being appraised. The statement usually concentrates on describing specific strengths and weaknesses in job performance. It also suggests courses of action to remedy the identified problem areas. The essay method is flexible as it statement may be written and edited by the appraiser alone, or it be composed in collaboration with the appraisee. However, it is time consuming.360-Degree AppraisalJob performance data is collected from peers, subordinates, line managers and other parties (customers) through questionnaires. This method provides practical feedback from a ‘360 degree scope’. However, it relies solely on opinion rather than evidence and thus is not always suitable.Rating SystemAn appraiser examines different components of a job and rates each part on a scale; e.g. poor performance outstanding performance. Almost any aspect of performance can be examined and are carried out in a standardized manner, making the result easy to compare and remain fair/equal. However, the criteria selected may not apply to all, resulting in inaccurate scores.Peer AppraisalEmployees on the same level appraise one another. An advantage is that both parties are familiar with the role and difficulty of the job, but workers are often too reluctant to criticize each other and may just lie. Upward Appraisal An employee evaluated someone more senior. The technique is growing in popularity but both parties may be intimidated and reluctant with the subordinate fearful of being reprimanded and the manager feeling attacked by unhappy employees.

Advantages Disadvantageso Make changes progresso Allow praiseo Constructive criticismo Method for feedback

o Time consuming and costlyo Daunting experienceo Rather subjectiveo Offense taken from commentso Anxiety and stresso Feedback must be confidential

Management by ObjectivesAn appraiser assesses the extent to which an employee has met their objectives – if they are met then their job performance is satisfactory. MBO provides clarity about what is to be assessed. However, unrealistic targets create the façade that the employee is not trying or cannot complete given tasks.Self-AppraisalEmployees appraise themselves based on set criteria, and are expected to be honest.

If the appraisal rating is low:o An advisory letter can be sent to the employeeo The employee may be counseled and given advice as to how to

improveo If there is no improvement, consequences may be discussedo Performance will be closely monitoredo If no improvements are made, action is taken toward dismissal

TrainingTraining is the process of providing opportunities for workers to acquire skills and knowledge. Some jobs require constant training others may only need basic training. Training can focus on job-related concepts or personal skills (assertiveness and stress-management). Objectives include:

o To enhance staff efficiency and effectivenesso To improve quality of work by employeeso To facilitate career and personal development of each staff membero To develop a multi-skilled and productive workforceo To help staff adapt to change

Benefits include:o Targets met effectively, increase of qualityo Less wastage, reducing costso Higher morale less absenteeism and lower staff turnover

Employee performance is assesed based on records

An appraisal meeting on conducted

Appraiser completes a written report

Both parties sign the final written report

A senior manager may counter sign to approve the assessment

o Good reputation attracts greater quality of workerso Better levels of customer serviceo Employees adjust better to change and can cope with growth

Drawbacks Includeo Costs of trainingo Loss of productivity when workers are absento Time consumingo No guaranteed improvement

Induction TrainingIntroduces new employees to an organization by introducing them to key personnel, touring the premises, learn about their duties and cover the company policies e.g. evacuation.

On-the-job TrainingThis is training carried out at the workplace, delivered by a colleague of manager. Junior managers may shadow a senior to observe their methods and learn through doing.

Off-the-job TrainingThis is carried out off site, and selected employees attend a course to attain knowledge that they are expected to share with their team members.

Dismissal and RedundanciesDismissal: termination of a worker’s employment due to incompetence or breach of contract. It occurs in the following circumstances:

Advantages Disadvantageso Establishes good working habitso Introduces corporate cultureo Settles workers in to contribute

more promptlyo Morale and confidence is boosted

o Time consumingo Key personnel must take time out

of their scheduleso May experience ‘information

overload’

Advantages Disadvantageso Relatively cheapo Issues targeted directlyo Few disruptionso Establishes colleague relationshipo Convenient location

o Trainees may develop bad habits from unqualified trainers

o Internal trainers may lack skillo Trainers must give of their time to

conduct

Advantages Disadvantageso Experts provide trainingo Wide range of training (e.g.

foreign languages)o No work distractionso Networking can take place

o Very expensiveo All skills may not be relevanto Newly skilled employees may feel

to qualified for their position and leave to find a better position

o Incompetenceo Misconducto Gross misconducto Legal requirements

Unfair dismissal is termination without valid reasoning e.g. inaccurate accusation. This usually occurs due to discrimination (on the grounds of age, race, gender etc.) or constructive dismissal – forced resignation. They have the right to take the case to a hearing and be compensated.

Redundancy: when the employer can no longer afford to hire the worker or when the job ceases to exist. When this occurs, there are two options:

o Voluntary Redundancies – the employer asks for volunteers who are offered a redundancy package (unlikely as it causes conflict)

o Compulsory Redundancies – the employer chooses who is made redundant by…

LIFO method (last in first out), keeping the loyal and long-served employees

Retention by merit, the least productive employees are made redundant

HL: Employment RightsAnti-discrimination Legislation

o Sex discriminationo Racial discriminationo Disability discrimination

(This is not always applied – it is acceptable for an all-girls school to hire only female PE teachers etc.)Equal Pay Legislation

o It is unlawful to award different pay for the same job unless one candidate has greater experience or qualifications

o Location must also be considered – the cost of living in different cities must be accounted for by pay

Health and Safety at Worko Businesses must offer a secure and hygienic working environment for

their staff and adequate facilities (restrooms and lights)o It may be costly but improves the quality of the workplace, reducing

absenteeism and increasing competitive advantageStatutory Employment Benefits

o All employers must offer maternity leave, holiday pay etc.National Minimum Wage

o All businesses must pay their workers a minimum of an indicated hourly rate, irrespective of the work they do or any other factor

Grounds for Immediate Termination1. Employee is unfit for position during probation2. Significant breach of rules and regulations3. Neglect of duty that leads to significant damage4. Inappropriate relationship with another employer that

jeopardizes the business5. Fraudulent conduct (theft)6. The employee is under criminal investigation

o NMW is enforced to increase the income of the poorest paid workers in the country

Changing Employment Patterns and PracticesEmployment Sector As a country develops, workers shift from the primary sector to the secondary and tertiary sectors. In a developed economy, most revenue comes from the tertiary sector.Ageing PopulationAs the birthrate falls, the workforce will shrink so a labour shortage will impact planning, recruitment and training. Firms will need to appoint and retain older employees and train existing staff to extend their longevity.Flexible Work Structures

o Organizational Restructuring: Less likely to be a traditional structureo Flexi-time: Businesses offer flexible working hourso Changing Recruitment Practices: Firms hire more flexible workerso Retention of Core Staff: Key employees will be retained for experience

and skills by using financial rewardso Training: Firms will less likely invest in training but the pressure to be

up-to-date with technology will increase given competitive workforce

Hot Desking – workers work at a communal desk to save space and costs

Advantages Disadvantageso Teamwork atmosphere, as

workers aren’t closed of from one another

o Observe other people’s work habits and learn from them

o Flexibility for movement when working on different projects

o Cheaper and more efficient for employers due to space maximization

o Environmental savings (less paper wastage)

o Depersonalization leads to lack of connection to work

o Cultural shift can be stressful and time consuming

o Employees may feel they deserve their own space

o Quick spread of illness with movement from desk to desk

o Set up wastes time each morning, with varying technology systems

o Lack of morale

Telecommuting - working elsewhere and communicating through technology, often seen in banks, insurance firms, market research firms and airlines

Advantages Disadvantageso Accessibility for those in remote

areaso Suitable for parents

o ICT reliance disruptiono Social isolation and boredomo Workers exceed work hours

o No commuting costs/stresso Autonomy for workerso Reduced overheadso Flexible hours for customerso Reduced absenteeism

o More distractions at homeo High equipment costso Specific employment profile

(self-motivated etc.)o Not always possible due to

space

 Flexitime – Staff work a core number of hours whenever they please, for example 8 hours Monday-Thursday and have Friday off

Advantages Disadvantageso Suitable to working parents

(more time with children)o Ability to break up work week,

allowing for more recreationo More rest = less stress and

happier employeeso Workers have more time for

appointments or further studyo More productive and well-rested

employees a greater output

o Scheduling limitations – hard to predict future free time

o Team projects may be hindered by absence

o Must balance times to ensure never short staffed

o Many employees may be absent on a busy day

o Scheduling can create conflict – requires a fair system

Portfolio Working – one is employed to undertake multiple jobs simultaneously, in turn receiving a flexible timetable and variety in their career. However, jobs occur only when required and therefore, pay is insecure

Part-time Employment – Employees work part time for flexibility, and businesses hire part time workers as they cost less as they are entitled to lower remuneration and are easy to ‘hire and fire’. However, they can feel undervalued and show less loyalty to the business, affecting productivity and turnover

HL: Handy’s Shamrock Organizationo Theory by Charles Handy, co-founder of London Business School in

1967o People are the most important resource within any organizationo Businesses ought to place greater emphasis on meeting the needs if

workers through job enrichment and flexible working practiceso In a ‘shamrock organization’, there are three groups of staff:

Core staff: full time, professional workers who handle daily operations - crucial to survival and growth (this group is shrinking)

Peripheral workers: part-time or temporary workers who are employed as required and are paid for short

periods of time, reducing labour costs – often makes up the largest portion

Outsourced workers: individuals/businesses not employed by the business but paid to complete mall and specific tasks

o Each component has its own advantages and limitations

SummaryProblems as a result of poor human resource planning can be summed up in the five R’s:

Recruitment (costs and time loss) Resources (time and money spent on personnel problems) Reservations (lower morale continual change in staffing) Returns (low return on input – profit) Reputation (poor corporate image – NOT employer of choice)

There are four main measures of personnel effectiveness:o Labour turnover (resigned staff ÷ total staff) x 100o Absenteeism (absent staff÷ total staff) x 100o Labour productivity (total output ÷ total staff)o Waste levels (waste ÷ total output) x 100

Unit 2.2: Organizational Structure

IntroductionIn most businesses there is a need for a more formal and organized structure. This helps a business to function more efficiently due to:

o Accountability: shows who is held responsible for what jobso Responsibility: shows who is in charge of whom, such as the

operations manager being in charge of all production workers

The Formal Organization: Job RolesAs a business gets larger and more complex, it has to become more structured for tasks and roles to be fulfilled in a manageable and coherent way. It addresses the following queries:

o The overall business structure – size, hierarchy, functional areaso Who is the supervisor/line manager (accountability)o Which people have authority and to what extento How different areas link to one anothero Verify staff positions in the overall organizationo Identify various channels of communication

The CEOThe Chief Executive Officer represents the head of the BOD (below) and is the top of an organization. They are ultimately responsible for running the business and are accountable to the company’s shareholders. Main roles include:

o Act as a figurehead or ambassador for the organizationo Lead the team of directorso Represent the desires, ideas and beliefs of the directorso Formulate organizational objectives and policies with the BODo Communicate with the BOD regarding problems, concerns and

decisionso Devise and implement business strategy

The Board of Directors (BOD)Directors are responsible for overall running of the business – there is usually one for each of the functional areas. There are two main types of directors:

o Executive directors – work full time at the organizationo Non-executive directors – do not work at the organization but are

consulted for their expertise

Duties of the BOD include: o Target settingo Devising long-term planso Establishing organizational policies and codes of practiceo Monitoring and controlling the organization’s activitieso Overseeing staff issueso Advising and supporting the CEO

ManagersManagers are responsible for a team of people and/or tasks. They are decision makers with responsibility for day-to-day implementation of the organization’s policy. They assist and are accountable to the BOD. They take on tasks delegated to them by directors.

Supervisors and Team LeadersThese are junior managers, carrying out some but not all of the duties of a middle or senior manager. They are more likely to be involved in operational decisions. They have direct contact with the workforce for whom they are responsible.

Other Employees (Operatives)Other employees will exist in a large organization, forming the majority of an organization’s workforce. Therefore most org charts are wide based pyramids.

The Formal Organization: Org ChartsAn organizational (org) chart is a diagrammatic representation of a firm’s formal structure. It shows four important features of a business:

1. Functional Departments – marketing, production, finance, human resources

2. Chain of Command – VERTICAL ASPECT (length of the chart) various positions of authority in the organization and direct line authority

3. Span of Control – HORIZONTAL ASPECT (width of the chart) the number of subordinates directly accountable to a single line manager

4. Official Channels of Communication – the route that messages are communicated within the organization

CEO

Board of Directors

Management

Supervisors and Team Leaders

Other Employees

Both the chain of command and span of control must be kept to the ideal amounts, for managerial, competitive, functional and communication purposes.

Above is an example of a stereotypical organizational chart with five hierarchical levels, functional departments providing structure, and height representing power. This is a traditional model, but others include:

Organization by Product: large businesses with a large range of products may structure themselves according to the various types of products they create

Organization by Process: this is an adaptation of organization by function and is suitable when there are clearly different stages in the production process

Organization by Geography: multinational corporations often organize themselves by geographical region, allowing the business to be more aware of and responsive to cultural differences and varied customer needs

Delegation and Span of Control

DelegationAs a business grows, managers need to relinquish some of their roles and responsibilities to others, as one person alone cannot effectively manage all areas of the business through delegation. Line managers entrust and

CEO

Marketing Director

Marketing Manager

Marketing Departmen

t

Human Resources

Director

HR Manager

HR Assistants

Operations Director

Operations Manager

Quality Controller

Production Operatives

Security Director

Security Staff

Finance Director

Finance Manager

Finance Staff

empower staff to complete tasks but hold them accountable for their actions. Effective delegation is an important skill, benefits include:

Saving time by not having to handle all tasks Employees become motivated as they have been entrusted with

seemingly important tasks

Managers often use the SMARTER acronym to ensure delegation is properly assigned. To be effective, tasks must be:

SPECIFIC MEASURABLE AGREED REALISTIC TIME-BOUND ETHICAL RECORDED

Span of ControlThis refers to the number of people who are directly accountable to a manager – the higher up in an organization a person is, the wider their span of control teds to be.

A wide span of control means there are fewer layers in the hierarchy, reducing costs with less managerial positions and a flatter structure also means that communication should be faster and more accurate

In contrast, this means there are fewer subordinates who are accountable to a manager and therefore it easier to control a small team which will be more effective

Large teams tend to suffer communication problems which may cause tension and conflict

ADVANTAGES OF FLAT STRUCTURES Delegation becomes an important factor so there are more

opportunities for subordinates to take on extra roles Overall improvement in communication since there are fewer layers Cheaper to operate as there are fewer levels of management Smaller psychological distance between those at the top and the

bottom, eliminating the ’them and us’ culture

ADVANTAGES OF TALL STRUCTURES Quicker communication within small teams Smaller teams are easier to control and manage Greater specialization and division can lead to greater efficiency and

productivity Greater opportunities for promotion – motivation for lower subordinates

Levels of Hierarchy

Hierarchy is an organizational structure based on a ranking system. The CEO, chairperson and BOD are usually at the top and the most unskilled employees are at the bottom. Each level in the hierarchy refers to a rank that is associated with degree of authority and responsibility.

The person directly above an employee on the next level is known as the line manager and is responsible for day-to-day management of their subordinates.

Flat and Tall StructuresTall organization structures have many layers in the hierarchy; therefore managers tend to have a narrower span of control. In contrast, flat organizational structures have fewer levels and managers have a wider span of control.

DelayeringThis is the process of removing one or more levels in the hierarchy to flatten out the structure. There are three main purposes to delayering:

Reduce costs by removing levels of management Improve the speed of communication flows by having flatter structures Encourage delegation as wider spans provide opportunities for

employees to take on more responsibilitiesDelayering is often associated with downsizing, which can reduce a firm’s costs because there are fewer core staff who are paid on full benefits. Downsizing can lead to flexible working practices as businesses hire more contractual workers. But both actions have drawbacks:

They create anxiety in workers who will be worried about their positions in the new structure, harming morale and productivity

Employees can be overstretched by an increased workload Decision making can take longer since managers are dealing with

larger teams

Chain of CommandThis is the formal line of authority through which orders are passed down in an organization (seen in the org chart). A flat structure has a short chain of command and a tall structure has a longer chain of command.

HL: Delegation and Accountability

HL: Bureaucracy

HL: Centralization and Decentralization

Advantages Disadvantageso Clear lines of communicationo Thus, improved coordinationo Establishes teams creating a

sense of belonging acting as a form of motivation

o Workers are isolated to teamso Rather inflexible which can be

problematic if there are external changes that require structural change in the organization

HL: Matrix Structures/Project Teams

HL: Flexible Structures

HL: The Informal Organization

HL: Outsourcing, Offshoring and the Migration of Human Resources

Unit 2.3: Communication

IntroductionCommunication: The transfer of information from one party to another. Managers spend a significant part of their time communicating to both internal and external stakeholders. The purposes of communication include:

Instruction Clarification Interpretation Notification Warning

Receiving Feedback Reviewing INFORMING

Communication is vital to the success of any business so that: Staff are aware of their roles and expectations Managers can gather and act upon feedback from employees,

customers and other stakeholders

Oral CommunicationOral or verbal communication involves people talking and listening to one another. It is a quick method because the sender and receiver are usually in direct contact and there is little time delay between questions and answers. The method allows questions to be asked and for feedback/clarification to be given. The effectiveness of the communication depends on the skill of the speaker, such as the tone of voice.

Examples include: Giving instructions Discussing problems Business meeting Job interviews for recruitment

Internal CommunicationCommunication within the

business organization

External CommunicationCommunication between organization and another

Job appraisals and feedback Oral presentations People simply talking to one another

Written CommunicationWritten communication refers to non-verbal methods such as:

LettersBusiness letters follow a set format with important emphasis placed on the layout and language used. Letters should:

Indicate name and address of sender Include the date Have a reference Include proper salutations

They can be used both internally and externally and provide a hard copy for future reference. They are also very specific. However, they are time-consuming and may take equally long to get a response.

MemorandumA memo is a business note from one person to another. It can be typed or just a handwritten note. They are used internally to call a meeting, to send a reminder or pass on a quick message. A memo can be quick to produce and is short, specific and easy to understand. They aren’t intended for passing on complicated information.

ReportsThese are a formal method of written communication in which researched information is presented. They follow a specific format and tend to have:

A title page with the author, audience and date An executive summary of what the report is and it’s purpose A contents page with page numbering An introduction Section headings for separation Conclusions and recommendations A bibliography An appendix with supplementary evidence

NoticesNotices are used to give a message to a range of people, perhaps by posting on a notice board or website. They can be both formal and informal depending on the content. Notices are useful for reaching many staff and can be left up as a reminder, but notices are not confidential and old messages are often ignored.

Executive Summaries

Advantages Disadvantageso Little cost, if anyo Detailed questions can be askedo Questions can be answered

without delayo Can help to judge an employee’s

ability to communicateo Facial reactions and body

language differentiate from text

o No permanent record of the conversation for future reference

o Information mayn’t be complete or truthful

o Confidential messages are more difficult to keep that way

o Meetings and interviews can be time-consuming

Executive summaries are written to provide a condensed version of a report’s content. Executives do not have the time to read many reports and need fast and easy access to information so this type of communication proves useful. A typical summary follows the following format:

Scope and purpose of report Methodology Main findings Conclusions and recommendations

But executive summaries must be very accurate as they are often read by decision makers who base their decision based on what they read.

AbstractsAn abstract is a shortened version of a report. It differs from an executive summary, as it provides no recommendations or guide to decision making whereas an executive summary summarizes the findings and recommendations. In essence, one could ignore the report if there is a succinct summary but this could not be done with an abstract, alone which tends to be shorter.

Research ProposalsThis is a planning document and sets out the key issues to be investigated. It may contain details of details of methods of research, an action plan and any foreseeable obstacles.

A major disadvantage of all written forms of written communication is storage – despite advanced ICT, paper usage is growing. In addition, these forms of communication are slow and a single response may take hours or days and the equivalent of a ten minute verbal conversation can be covered in email over a span of weeks.

Visual CommunicationVisual aids can enhance communication as they:

Can be easily understood Can communicate ideas quickly Are often cheaper to produce that the same space filled with words Cater for visual learners Have a longer lasting impact

Different images are used for different purposes: Bar chart – for ease of comparison Pie chart – for expressing percentage figures Line graph – to show time-series data, such as sales figures during the

past year Histogram – for showing trends

Other visual aid examples include photos, symbols, tables, maps, sketches and diagrams. Other examples of visual communication include sign language and body language.

Effective Communication Ineffective Communication Notices All speaking at once

Taking turns to speak Listening to others’ opinions

Bad arrangement of working space

Non-Verbal CommunicationOther than oral communication, all forms come under this category. This includes written, visual and ICT methods of communications.

Formal and Informal Communication ChannelsInformal CommunicationThis refers to all unofficial communication channels that exist among informal groups, which tend to occur naturally in the workplace. This type of communication doesn’t necessarily relate to work matters. Some managers see informal communication as a hindrance to efficiency and mayn’t support the management objectives. Others may see it’s benefits, including:

Can foster a sense of belonging in the workplace, increasing motivation It can create a sense of security and mutual support – people can talk

to colleagues to deal with concerns The pooling of ideas can generate solutions that may have been

constrained by formality

Formal CommunicationAll official channels related to work matters and can then be further categorized into open channels (can be shared between anyone) and closed channels (confidential information).

Information and Communication TechnologyEmailRefers to the process using computer wide area networks as a mailing system. It is a very fast method because all data is already in the electronic form. The data can be submitted to many recipients at once, saving on telephone/fax bills and stationery costs. However, the initial costs (ICT equipment) and ongoing costs (internet) are quite high. Moreover, email data transition is not always secure and computer systems can always break down.

FaxA facsimile machine converts text and images into electronic form for transmission, and the receiving machine then reconverts back into an image that is presented onto a hard copy. It is a quick method, and the fax can be send whether the receiver is by their fax machine or not. The method is less popular today as email is a cheaper equivalent with no need for paper or ink replacement.

Video-conferencingThis communication method combines telephone, computer and video technology and allows meetings to take place when staff are in different locations – cutting travel costs. More and more MNC’s are choosing this option to interview overseas recruits. Once initial costs are paid, it is quick, cheap and brings people together in one location – it can also be recorded for

future reference. However, meetings can be difficult to conduct with such heavy reliance on technology.

Telephones/MobileMobile phones are still extremely popular in workplaces as they make all staff contactable at almost any time and location.

In summary, electronic communication methods are growing in popularity as they allow for faster and cheaper contact over long distances, but can also require the need for expensive equipment. Businesses that rely heavily on ICT equipment tend to come to a halt when technology fails.

Factors Influencing the Choice of Communication Method Personal preference Organizational structure : A tall structure requires more formal and

sophisticated communication Security issues and concerns : Important records that need to be kept in

case of technical breakdown Skills and training : Some methods can only be used if staff know how Ease of use : Some may prefer powerpoint over prezi due to the way it

works Size of business : Large firms may require email whereas small firms

may rely on meeting in person and communicating verbally Storage issues : Orders or complaints need to be recorded whereas

conversations may not Location : Time zone differences may mean email is favoured over

phone calls Urgency : Depending on the urgency of the information, a different

method may be used – a letter or email is less urgent than a phone call Cost : Businesses may opt for cheaper methods

In reality, a business will combine methods to fit their requirements. Overall, they will focus on value for money, and which methods will be most efficient.

Barriers to Effective Communication High costs: Firms mayn’t have sufficient funds to train staff in particular

methods, which could make them more effective Technological breakdowns Language : Messages can be lost or altered in translation Accents: Different pronunciations and tones of voice can be

misinterpreted Jargon: Technical language can speed up communication but only if

understood by all involved Cultural ignorance : Businesses need to be culturally aware to ensure

they don’t offend Technophobia Geographical location : Geographical location can impact importance

factors like phone reception Internal politics Poor presentation skills : Listeners may lose interest

Body language : Listeners can be put off and receive negative vibes ‘Chinese whispers’: In large organizations, messages can be distorted

when being passed down the chain Physiological barriers: Poor hearing or sight for example

Consequences of Poor CommunicationPoor communication hinders businesses in four ways:

Low morale – staff feel out of touch, have lack of direction and may feel undervalued

Errors will arise due to lack of direction can be costly or harm a firm’s image

The above factors may decrease competitiveness and in turn, productivity

Lack of control can arise due to unclear/ badly communicated instructions

HL: Communication Networks

Summary

Unit 2.4: Leadership and Management

IntroductionA leader is someone who influences and inspires others to get things done. They tend to focus on achieving broader goals or visions, with no definite time frame in mind.Management is about problem solving and decision-making. Managers are involved in complex tasks including planning, organizing, budgeting, reporting, monitoring and controlling. They tend to focus on time frames and deadlines. Theorist Mary Parker Follett, famously defined management as ‘the art of getting things done through people’.

There tends to be three broad levels of management: Senior management: Oversee long-term aims and strategies of the

organization. They are responsible for the middle managers.

Middle management: In charge of running individual departments. They set departmental objectives, and are responsible for implementing strategies to achieve them. They

accountable to senior management, and responsible for junior management.

Junior (supervisory) management: Lower-ranking managers who are in charge of monitoring daily routine tasks.They are responsible for their team of workers.

Professor Warren Bennis: Believed that successful leaders take an interest in what is happening

in their organization He found that there is no single way to lead an organization, but

leaders have to find a way that suits them He did find some general characteristics of successful leader

Henry Mintzberg:

Nature of Leadership

Routine tasks

Planning Tasks

Communi-cation tasks

Interpersonal Roles: Figurehead, leader, iason

Decisional Roles: Negotiator, resource allocator, disturbance handler, entrepreneur

Informational Roles: Spokesperson, monitor, disseminator

Leadership Styles

AUTOCRATIC- Quick decision making

during crises- Appropriate for

unskilled employees- No feedback for leader

- Alientated workers

DEMOCRATIC- Better morale

- Sharing of idea > improved decisions

-Time delay, as more people are involved

- Not suited to a large workforce

LAISSEZ-FAIRE- High motivation, as

employees feel trusted- Suitable in creative

fields- Slow, as there is limited direction

- Reliant on teamwork

SITUATIONAL LEADERSHIP- Removes the

limitations of each style, as if a style is not

applicable, it doesn't need to be used

-Changing style might be confusing

Situational Leadership: a leadership approach is dependent on the competence and confidence of the employees. Leaders must realize that the leadership style should depend on the situation and employee. Leaders need to be flexible and dynamic. Factors that could influence the required leadership style include:

Culture Leader trust levels Organizational structure Task difficulty Subordinate skill

*Remember the acronym ‘CLOTS’

Trait TheoryBased on the idea that leadership and management styles depend on personal characteristics:

Listening skills Enthusiasm and drive Ambitious aims Decisiveness in execution of business strategy Entrepreneurial Responsive to change Seeing the bigger picture High standards of integrity Influential and inspirational Prudence in decision-making

Peter Drucker came to the conclusion that there were no exact traits that could be applied to all leaders.

Contingency Theory

Based on the idea that there is no single best way to manage an organization or lead people, as what is effective in one situation my not be in another. The ‘best’ style depends on factors that affect the situation such as size, knowledge and expertise of the workforce.

FIEDLERA leader’s own personality has a large effect on leadership effectiveness i.e. the performance of the workforce in contingent on the personality of the leader. He also suggested that the effectiveness of leaders depends on the situation under consideration. He believed that 3 principles determine leadership style:

Relationships: how well they get along with subordinates Situation: the nature of the task itself Authority: how much power the leader has

This suggests that almost anyone can be a leader if his or her leadership style is matched to the task at hand. However, the theory ignores other situational factors that impact effectiveness such as experience and training.

LIKERTFour types of leadership were identified:

Exploitative autocratic – no trust in subordinates, use threats and punishments to motivate

Benevolent autocratic – some trust in employees and will seek their opinion at times, a paternalistic style

Participative – place a great confidence in workforce but retain decision-making power consultative

BLAKE AND MOUTON

TANNEMBAUM AND SCHMIDT

Functions of Management (HL)Functions of management are the responsibilities and tasks carried out by managers, i.e. planning, organizing, directing and controlling of business operations.

HENRI FAYOLIdentified the five functions of management:

Planning: setting the course of action to reach objectives, both tactical and strategic

Organizing: organizing resources, delegating and allocating tasks to meet deadlines

Commanding: giving instructions to achieve objectives, enforce discipline

Coordinating: focus all sections/departments Controlling: taking corrective measures to meet standards

Also outlined principles of effective management: Division of labour for specialization

Formal lines of authority and wide spans of control (like the military) Authoritarian style Unity of command to improve communication Equity in treatment Create harmony and cohesiveness

CHARLES HANDYSuggested common characteristics present in effective leaders:

Intelligence Initiative Self-assurance

Key roles of managers: General Practitioners: Managers must deal with health problems Confronters of Dilemmas Balancers of Cultural Mixes Have the Helicopter Factor: Rise above and see the bigger picture

PETER DRUCKERHe believed that managers should not get too involved in daily activates of employees, and thus encourage decentralization in the work place. They should carry out five basic functions:

1. Set organizational objectives2. Organize tasks and people3. Communicate with and motivate employees4. Measure performance5. Develop people

Unit 2.5: Motivation

Motivation: internal drive that causes an individual to take actionIf people are the most expensive investment a business makes, then you need to have your employees motivated to work to their full potential

“A businesses most important asset leaves at the end of every day, and it is a manager’s job to ensure that they come back.” – Jim Goodnight

Intrinsic: comes from oneself, internalo Desire to succeedo Being aware the advantages of doing something – e.g. I will be

fitter, I will have more free timeo To learn something new

Extrinsic: driven by external factors, rewards and/or punishmentso Failure

o Punishment

Workplace motivational theory has evolved over time as the nature of industrial development:

1911

1927

1943

1959

1960

1961

1963

1964

Unit 2.6: Organizational and Corporate Culture

IntroductionCulture: What is considered ‘normal’ to an organization, such as the way co-workers behave within the business.Corporate Culture: Largely based on beliefs, values and attitudes of the management and employees e.g.

Punctuality Dress-code Acceptability of smoking

The Importance of Understanding Organizational CultureCultural Quotient (CQ): the ability of an individual to blend into occupational, corporate and national cultures. Measures the ability of people to adjust to unfamiliar situations such as hostile takeovers or crises.

Culture also applies to the attitude of workers toward change. If employees are not interested in pursuing change, this will impact the business’ success. Acceptance of change will aid a business in responding to the changing market. Cultural harmony will come about if all staff share the same values.

The main problem for managers is trying to foster a desired culture is that culture is established over a long period of time.Influences on Organizational CultureThe acronym ‘NORMS’ can be used to remember the interrelated determinants of organizational culture:

Nature of the Business: Culture is shaped by mission, aims and objectives

Organizational Structure: Tall structures small independent teams, Flat structures collaborative teamwork

Rewards: Appropriate remuneration for effort will develop a strong and united culture

Management Styles: Theory Y managers benefit from independent, autonomous workers, Theory X style managers foster a dependent culture

Sanctions: Few sanctions can encourage staff to be slack but rigid policies may create resentful staff

Advantages of Strong Culture Sense of belonging and security

Theories of Organization or Corporate CulturesCHARLES HANDY

EDGAR SCHEIN

DEAL AND KENNEDY

KOTTER AND HESKETTTwo types of corporate cultures:

Adaptive Cultures: Receptive to change and exist in organizations that adapt themselves to change, staff are encouraged to be entrepreneurial and take risks by not having a culture of blame. Usually found in innovative cultures.

Inert Cultures: Resistant to change and exist in organizations with negative values of change to the current culture. They promote inertia rather than proactivity

GOFFEE AND JONES‘Double-S model, looking at two dimensions which when both present, create the ultimate culture.

Sociability: The extent to which people have concerns for their colleagues. High sociability = ‘people culture’, low sociability = task focus

Solidarity: Degree of cohesiveness/unity, high levels of which create harmony/efficiency and low levels of which prioritize self-interest

GEERT HOFSTEDEStudied the link between international cultures and organizational cultures – five dimensions:

Power distance: The extent to which subordinates expect and accept unequal distribution of power, this is similar to centralized vs. decentralized models

Individualism: The extent to which people care for themselves, and feel responsible for to care for others or believe this is the role of the government

Masculinity vs. Femininity: The extent to which the organization lies within traditional gender roles

o Masculine: strict, aggressive, competitiveo Feminine: relationships, quality of life

Uncertainty avoidance: The extent to which people prefer structured routines to flexible structures, low uncertainty avoidance cultures accept and feel comfortable in unstructured situations or changeable environments and try to have as few rules as possible

Long versus short term orientation: A long-term oriented business focuses on the future, whereas short-term oriented businesses are related to the past and the present, including steadiness, respect for tradition, preservation of one's face, reciprocation and fulfilling social obligations

Impacts of Culture

Consequences of Culture Clashes

Summary