When reviewing management theories and discussing innovative, successful organizations it can be suggested that there is an increasing realization within such organizations that the human resource available is not only a flexible cost factor but also of value to the organization’s success and as such an economic value in itself. The actual measurement of this value however, giving it more of a rational rather than an emotive edge, seems to remain somewhat of a mystery as is reflected in the writing of Alistair Rylatt.
The question is what actual worth in economic terms a productive workforce has and how this worth is measured. To educate and motivate, to train and to develop costs money and these costs are well documented in the organization’s Profit and Loss statement (P&L). The ROI of these costs however remains somewhat elusive. As Rylatt states, it can indeed be seen as somewhat difficult to place a monetary value on intangible assets such as high motivation, great knowledge, high morale and excellent customer relationships, yet he looks positively to the future claiming that the face of accounting will change over the next decade to include reports on these so called intangible assets and as such an inclusion of these assets in the overall measure of the current and estimated future value of the organization.
The areas of reporting he suggests, which will be reviewed periodically to allow for comparison, are Customer Capital, Human Capital, Intellectual Capital, Relationship (strategic business alliances) Capital and Systems Performance. What Rylatt does not explain however is, who measures these factors and how? Will the measuring be done by outsiders or by senior management? Will there be group or individual evaluations and appraisals? What if the level decreases in an individual employee or a whole team over the course of perhaps 10 months, will there be further training or will there be job rotation? Will this area of reporting be part of financial or human resource management?
Rylatt brings up downsizing as a reason for implementing intangible asset measuring, in order to gauge how downsizing may affect the overall worth of the organization in terms of loss of intellectual property. Finding a way to measure intellectual property to make sure that downsizing does not cost the organization its competitive edge could therefore be seen as being of inherent value to any organization and a great motivation in overcoming doubts whether to invest in developing tools to measure these intangible organizational assets.
Personal observation as a Manager in different German and Scandinavian retail organizations over the last fifteen years however has shown that quick and easy solutions, influencing the costs on the P&L today, tend to be favoured over future oriented, value enhancing human resource management tools. A study done on thirty-three Australian companies by McKinsey and Company which Rylatt recounts comes to a similar conclusion, since about seventy-five per cent were found to view people as costs rather than as an asset.

It is the conclusion of this blog that whilst successful innovation and change needs creative and flexible employees with a high knowledge level, the current economic uncertainties many organizations have to face do not yet favour the inclusion of intangible asset measurement, but the possibility of implementation makes hopeful for the future.

In this week the focus lies on the unpredictable dynamics of change, the human adjustment to change and the challenge for Management in avoiding, minimizing and overcoming possible difficulties during the change process as well as steering the process in such a way that sustained economic value can be achieved. Visscher and Ripp suggest that managers encounter chaos on their path to achieving organizational change and that they react either by enhancing the illusion of control or by accepting chaos as a given and basing their actions on it. In their article the authors focus on managers and consultants who embrace change and base their management/consultancy efforts on this. They define three different agents of change; these being the Enlightened Modernists, the Ironists and the Postmodernists. Enlightened Modernists work with the view to achieving results and base their actions on this goal, since that is what they are hired for and will be judged on. In this way they take on the role of the expert and base this expertise on their experience, their rational analysis and their knowledge of competitors, the market situation and modern management theorists. The management strategies these agents of change propose are explained as success oriented with the view to rationalizing the change process and justifying its implementation. Ironists on the other hand are defined as agents of change who don’t seek a controlling management of change, but rather a cooperative management which seeks to encourage and initiate change not by focusing on the successful end of the change process but by dealing with the current problems and situations that can be seen as hindrances to change. Visscher & Ripp define the third group of change agents as Postmodernists, who refrain from initiating change and pursuing set goals thereby avoiding what is called the illusion of agency in the change process. In this way they are defined as taking the viewpoint of outsiders, who analyze and rationalize organizations but leave the actual change process to the self-organization of the employees in order to enhance their reflexivity and creativity and thus to encourage different perspectives, so that a process can set in that can be described as organizational self-healing. As with all theories, some can be seen as more potent or better equipped to manage change than others. From personal experience it can be seen as important to know the organization and the level of motivation, openness, knowledge and expectancy of its employees before deciding on one or a combination of different change agent perspectives.

In this week the focus lies on measuring change as opposed to evaluating the effects of change programs. The simplest way of distinguishing between the two is by stating that the evaluation of change outcomes focuses on the past i.e. on change policies that have been implemented and are then evaluated against set targets, whilst measuring change can be seen as effective management, in which the focus is not only on past performance, but also on analyzing present and shaping future performance to reach present and future target goals. Chenhall & Langfield-Smith examine the link between performance measurement and reward systems, trust and strategic change. What can personally be seen as interesting about this study is the emphasis that is placed on the so called “soft” value of trust and that this value is described to be equally important to “hard” management tools which are after all easier to grasp, implement and evaluate. Chenhall & Langfield-Smith’s study focuses on a manufacturing company which was evaluated over a period of fifteen years. Basis of the evaluation was the development of a performance evaluation and compensation scheme based on gain sharing, as well as examining the history of strategic change. The fifteen year study brought issues of trust between employees and management to light and as such the study used theories of trust to interpret the firm’s fifteen years of strategic change. Trust in this sense is explained as being shaped by common values, beliefs and principles between employees and management. In a management sense trust is categorized as Contractual, meaning written or verbal agreements; Institutional, meaning the rules, roles and regulations imposed upon all members of an organization; Calculative, pertaining to contractual safeguards and Organizational, which includes effective workplace coordination practices and the explicit commitments to contractual trust. These categorizations show that the developing, fostering and safeguarding of trust can be seen as a valid management tool through which organizational change can be supported by the body of employees in an organization including Management. Trust in itself can not be seen as enough however, as Chenhall & Langfield show, just as strategic control mechanisms in themselves, such as gain sharing were found to be lacking in sustained effectiveness. It is the inclusion of trust in the formal change measurement process that makes for sustained success. On a personal basis it can be seen as positive that the human relations element of trust is given the importance it deserves in human resource management.

This week my blog focuses on leadership and project management. As such, the basis of project management is explained as improving customer relation, lower costs, improving quality and internal coordination in order to gain better control of organisational resources such as financial, physical and human resources. In order to achieve this, four core knowledge areas are defined based on cost, scope, time and quality and combined with four facilitating knowledge areas such as human resources, communication, risk and procurement management. Using project management then leads to the comparison of leading as opposed to managing, where managing is explained as planning, organising, controlling and producing predictability whilst leading is explained as giving direction, aligning people, motivating and as such allowing and producing change; in other words the relationship between hard (managing) and soft (leading) issues in management. Sweet and Heritage see three of the most pressing challenges managers face as firstly having to function under huge time pressure, whilst still having to identify and take action, secondly in gaining employee and organisational commitment to change and thirdly in measuring the success of the change process, especially the “softer” issues such as cultural change. Sweet and Heritage see these so called softer issues as the most often ignored even though these can be of great importance to implementing change, for softer issues are defined as the way employees understand and accept business reasons for change, as well as showing the effectiveness of leadership and team work through employee commitment and productivity. In order to effectively measure these softer issues, Sweet and Heritage suggest using a questionnaire covering the issues at the heart of any change implementation, by asking employees to rate their level of agreement to various statements given. Leadership and managing people should then be adjusted to the results of the questionnaire. Theoretically, using such a questionnaire can be a valid tool in large organisations in order to gauge where their employees stand in terms of accepting and supporting change. Practically however it can be suggested, that employees can view this as a test that could affect their career if the results are not as expected and therefore it could further be suggested, that those that have answered the questionnaire will inform the next group of the questions that can be expected. From personal experience, working in an organisation that uses such a questionnaire to measure the extent to which managers are inline with organisational change, future goals, and culture whilst also gauging training or development needs, it is an open secret which statements warrant an agreement and which do not.

In this week the focus lies on implementing innovation and change. It can be suggested that it is theoretically easy enough to decide on implementing change, but the practical implications involved, such as personal fears, reservation or unwillingness to accept changes, could hinder its success. The answers that are offered to overcoming these obstacles, include a positive communication management, a Human Resource Management (HRM) focusing on human resource development and proactive job/work design, the identification and assessment of the organization’s competency profile, as well as an Innovation Portfolio Management in which projects designed to bring organizational success are collected, selected and evaluated while also highlighting those projects that have, or could turn out to be, poor performers. A greater understanding is gained when analyzing the above journal, for Waldersee and Griffiths agree with the importance of breaking down employee resistance to change and highlight two approaches organizations may choose to adopt in order to implement innovation and change. The first of these is defined as the participative approach in which change is seen as depending on generating support, whilst the second is defined as the unilateral approach which sees forced changes to behaviour as the cause of shift in attitude toward change. The basis of Waldersee and Griffiths’ discussion lies in discovering the better method of change implementation. For this they cite a study of 408 change implementations in different organizations, which comes to the conclusion that while support is important, the success of the participative approach depends on the type of change implemented, whilst the greater success was achieved via the unilateral approach. The tools they describe as the basis of this approach include technical solutions such as automation, process redesign and human resource tools such as restructuring organizational communication, employee selection and development, work rules, job design and possible downsizing. The conclusion that can be drawn however is that whilst the unilateral approach can be successful in reinforcing change, providing support along the way cannot hurt. From personal experience working for international organisations, change was implemented using the unilateral approach, but its success in terms of employee satisfaction and subsequent productivity was achieved using participative methods.

The focus this week lies on the interplay of organizational power and politics that foster a resistance to innovation and change due to fear of loss of influence and control, and on the part of the empowered a fear of the sudden increase in responsibility, accountability and possibility of failure. Human Resource Management (HRM) therefore has the task of directing focus away from personal fears regarding loss of status and power to the bigger goal of organizational success, by supporting effective change management and encouraging the development of innovative ideas and products. Loewe and Dominiquini define this as companies actively demonstrating their willingness to not only talk about the importance of innovation, but to actually support and enforce the innovation process. A study done in more than 550 large companies defines the mismatch of wanting to be and actually being innovative, for as Lowe and Dominiquini state, the vast majority rated innovation as critical to future organizational success, whilst at the same time the actual innovation effectiveness in their organizations was rated as far below standard. Those few organizations that were rated as effective innovators had leaders who frequently reinforce, support and reward innovation. Effective innovation, according to Loewe and Dominiquini, depends on effective leadership behaviour, in which employees are empowered to be innovative through effective processes and tools such as use of hands-on employee experience and the building of an idea-pool from which individual ideas to be further developed are selected. The use of critical testing and experimenting before implementation, the inclusion of innovation development and implementation in the evaluation process, the harnessing of the creativity of all employees via cross-departmental teams and the overcoming of fear of failure via an organizational culture that allows for and learns from mistakes, are further tools proposed by Loewe and Dominiquini to overcoming barriers to innovation. The understanding that is gained by reading Loewe and Dominiqui’s article in the above journal, and that also reflects personal work experience in a German industrial company dependant on innovation and change management in order to keep ahead of the competition is , that taking the focus away from fear of failure and fear of loss of power by empowering those that are creative, willing to learn and future oriented, can be an effective way of encouraging enablers and overcoming barriers to innovation and change.

In this week 6 my blog deals with the why, when and how of implementing organizational change and the question of whether organizations should follow a change path which is unique to the specific factors facing each organization, or whether to implement standardised, universal change tools. If an organization changes because its competitors do, will that bring success or make it look like a carbon copy? What if the organization decides to renew itself and in consequence its customers feel left out or left behind and therefore turn their backs on the organization’s products? In order to implement change, there are many theories defining the tools and paths that are available to the organization to choose from. As CA Carnall states, these theories very neatly define the steps and stages of achieving organizational change, without taking into consideration that the business world; its interplay of hierarchy and control, power and people, market and environment, global and national interests; all impact on the organization and its change process. The challenge for executives, according to CA Carnall, therefore lies in having to learn to combine this continual change that is external in nature, with an internal leadership that is able to sustain the organization’s equilibrium both internally and externally. CA Carnall questions whether the many different change theories take the internal and external influences, which could hinder or accelerate change in an organization, into consideration. Carnall goes on to criticize the Contingency Theory for accepting contingencies to change as a given that is largely immutable even though, Carnall states, it is possible for organizations to respond to for example contingencies of national constraints by reorganizing globally. The conclusion then is that there can’t be the one be-all and end-all solution to achieving organizational change, since the internal and external factors facing the organization are themselves prone to continual change. The answer therefore could be seen to lie not only in the willingness to change, but also in implementing organizational structures and ongoing organizational learning that value and support this change.

In week my blog on Innovation and Change focuses on the Learning Organization and the contribution Human Resource Management (HRM) makes in influencing the organization and its employees to view learning and the hereby required skills as an important organizational resource, which can be linked to achieving organizational goals. In theory, all aspects of learning, its importance to the organization and the individual, its worth in achieving competitive edge and reaching organizational goals make sense, whilst in reality as Argyris explains; individual behaviour can often hinder effective learning from taking place. This individual behaviour is explained as lack of success or criticism being met with defensive reasoning where emphasis is placed on external factors, rather than allowing for critical analysis of ones own personal contribution to the failure. It is this critical analysis which fosters learning, because here the focus is not on external reasons for failure, but on what can personally be done to improve in future so as not repeat the mistakes of the past. In this sense, failure or under performance in turned into an individual learning experience. Argyris defines this as “single loop” and “double loop” learning, explaining that whilst the former focuses on acquiring knowledge and skills, the latter focuses on a learning process in which the acquired knowledge is applied and its subsequent success or failure is analyzed, in order to gain knowledge from this analysis. Argyris argues that whilst competitive success also depends on learning, many people do not know how to learn or what effective learning entails. From personal reflection it can be suggested, that perhaps some managers overlook that being in leadership positions is not the reward for past or previous learning efforts, but that learning is in fact an ongoing process and that the challenge for HRM therefore lies in overcoming the barriers of defensive reasoning to foster an organizational culture of individual and collective learning. The importance here according to Argyris, lies in top management critically analyzing and learning from their own behaviour and encouraging this critical analysis and learning experience in the lower management levels, so that organizational change can take place.

This week the focus lies on corporate vision, culture and strategy and how these are interlinked, as well as on how strategy can be planned and how it ties into the corporate vision. From a Human Resource point of view, this interlink between organizational vision, culture and strategy leads to a strategic Human Resource Management (SHRM), in which resources are allocated according to the organization’s future needs and performance. Recruitment and staffing, especially talent attraction and retention are therefore important aspects of SHRM, in order to identify, develop and support those employees who J.M. Howell defines as effective champions of innovation. Champions being those employees who are able to recognize innovative ideas and products with potential for attaining competitive edge, as well as those who are able to seek out and promote innovations within their company and convince leaders to allocate funds to turn innovative ideas into commercial products. Howell explains that the secret to an employee being a champion lies in their behaviour and personal characteristics; these being creativity, enthusiasm, the ability to move beyond the boundaries of their responsibility and the drive to motivate and challenge their organization to seek out and implement innovative ideas and products. It can be suggested that no matter how convincing the employee is, recognition and implementation of innovation and change can not take place if the organization has a too rigid hierarchy and an unwillingness to change and be challenged by their employees. Howell groups organizations into two categories, one being the Champion Breeders and the other the Champion Blockers. Whilst the first seeks to strategically recruit and retain employees who show creativity, initiative and enterprise, the other views champions as disruptive and high maintenance candidates who challenge their authority. It can therefore be suggested, that in order to achieve competitive edge and growth, organizations should focus on leadership and a strategic HRM that supports an organizational structure and culture which recognizes that innovation is not solely a technical capability, but needs champion employees who are able to develop and turn innovative ideas into commercial success.