Issues of Management

An organization’s technology is the process by which inputs from the organi­zation’s environment are transformed into outputs. Technology includes tools, machinery, equipment, work procedures, and employee knowledge and skills. In the present competitive world, technological breakthroughs can dramatically influence organization’s products, services markets, suppliers, distributors, competitors, customers, manufacturing processes, marketing practices and competitive position.

Some Examples:

1. Recent technological advances, as we well know, in computers, lasers, robotics, satellite networks, fibre optics, biometrics, cloning and other related areas have paved the way for significant operational improve­ments.
2. Manufacturers, banks and retailers, for example, have used advances in computer technology to carry out their traditional tasks at lower costs and higher levels of customer satisfaction.
3. Consider the case of an old economy giant, Ford Motor Company, which is morphing into a new economy animal using web-based technologies to the best advantage. Thanks to the Internet, the old days of being able to concentrate only on the nuts and bolts of the business seem to be over. The winners are going to be companies that move closer and connect well with customers.
4. Take the stunningly successful case of MP3, a freely available standard for the compression and transmission of digital audio. The big guns of the music business like Sony, RCA and the rest were so confident about their control over the music industry that they could not see the threat posed by a tiny player like MP3(dot)com, which quietly spun its own B-web.

The company did not try doing everything: the B-web had a combination of content companies (like MP3); manufacturers such as S3 (maker of the Rio MP3 player); distribution technologies (like Napster); and, of course, hundreds of thousands of teenagers who swore by the music, but could not pay for it.

1. Thanks to the internet, customers can now comparison-shop for cars online and purchase cars online from a number of distributors, negotiating a deal on terms that are extremely favourable to them. Most consumer electronics and book retailers have to compete on the Internet in addition to location-based competition. The Internet is altering economies of scale, changing entry barriers and redefining the relationship between industries and various suppliers, creditors, customers and competitors.

Technology and Competitive Advantage:

When a firm is able to get past competition by creating superior value at lower cost — as compared to its rivals it is able to enjoy competitive ad­vantage for fairly longer periods of time. To enjoy such a position, managers need to exploit a firm’s strengths thoroughly and develop capabilities and competencies, so that rivals find it difficult to copy or imitate it.

Competitive advantage requires a fit between a firm’s internal strengths and weaknesses and external opportunities and threats. To obtain a competitive advantage, a firm must have competencies that allow it to create a higher perceived value than its competitors or produce the same or similar products at a lower cost or to do both simultaneously.

Superior competencies help a firm create higher perceived value and/or achieve a lower cost structure. For example, McDonald’s outstanding success all these years can be attributed to its ability to put its resources to the best use, carry out its value-chain activities in a coordinated way in sync with a carefully crafted strategy in order to deliver superior value to customers at a lesser cost.

To remain at the top, firms must constantly innovate; come out with novel products that offer superior value to customers at an affordable price. Introducing new products helps firms create more value for customers. At the same time, innovations in manufac­turing (like lean manufacturing) and business processes (re-engineering) allow firms to lower the cost structure. This is where technology and innovation come to play a major role in building a sustainable competitive advantage.

Shortage of Skills:

As new technologies are developed and implemented, there is an urgent need to upgrade existing employee skills and knowledge. Additionally, there will be growing demand for workers with more sophisticated training and skills especially in emerging sectors like telecommunications, hospitality, retailing, banking, insurance, biotechnology and financial services.

For example, service sector employees require different skills than those required in manufacturing. They need strong interpersonal and communication skills, as well as the ability to handle customer complaints in a flexible way.

Downsizing and Rightsizing:

New technologies have made it possible for fewer people to do more work than before. Companies have realized the importance of replace people with machines—known as automation—long ago. The physical work is cut into pieces and converted into digital commands now-a-days, thanks to the intro­duction of computer information technology in manufacturing processes. As a result of this, many jobs are disappearing faster than one can even imagine. Coupled with the need to go lean and clean, most companies are showing the door to people who fail to acquire new skills quickly.

Downsizing the process by which an organization lays off managers and workers to reduce costs —has become the order of the day. In a tough competitive scenario, companies are forced to adjust the number of employees needed to work in newly designed technological work spots—which is therefore known as rightsizing.

The way the work is being handed, thus, has undergone a radical transformation over the years. We are no longer talking about job losses due to economic down­turns. We are talking about lean and fit organizations that are able to run the race with competition and emerge as winners.

How Companies should Deal with Imbalances in Labour Supply?

When faced with a shortage:

1. Recruit new full time employees
2. Offer incentives for postponing re­tirements

iii. Rehire retired employees part time Attempt to reduce turnover

1. Work present staff overtime
2. Sub-contract work to another firm
3. Hire temporary hands

vii. Re-engineer to reduce needs

viii. Outsource an entire function

1. Use technology to improve produc­tivity
2. Re-allocate people from elsewhere in the organization
3. Re-allocate work tasks among cur­rent employees

When faced with a surplus:

1. Do not replace employees who leave
2. Offer incentives for early retirement

iii. Transfer or re-assign excess staff

1. Use stack time for employee train­ing or equipment maintenance
2. Reduce work hours
3. Lay off employees

vii. Freeze hiring

Outsourcing:

To remain cost competitive, many firms are also engaging in an increasing amount of outsourcing. Outsourcing is simply obtaining work previously done by employees inside the company from sources outside the company. If an external source has expertise in an activity that is not strategically critical to our business and is able to do that cost-effectively it is better to outsource it. You can benefit in the form of excellent quality, reliable supply and low cost.

You can also focus exclusively on doing what you are good at (the so called mission critical activities)—thereby enhancing your own competitive advantage. For example, Dell outsources the manufacture of its computers. It concentrates all its efforts on enhancing its Web-based direct sales capability and does not dilute its energies on other aspects of the game. Outsourcing, not surprisingly, is a big hit with many global firms. Companies such as Nike and Reebok have succeeded by focusing on their core strengths in design and marketing and contracting all their footwear manufacturing to external suppliers.

Telecommuting:

The rapid advances in technology have led to the relocation of work from the office to the home. Telecommuting—also known as teleworking—has become the order of the day-where employees work at home, usually with computers and use phones and the Internet to transmit letters, data and completed work to the home office. Companies have been able to increase their applicant pool through this mode and employees have also been able to live further away from cities and gain considerably due to savings in rents, transportation and other costs.

Internet, Intranet Revolution and Virtual Organizations:

Internet and information technology have enabled companies to become more competitive by cutting costs. Manufacturers, banks, and retailers have success­fully harnessed computer technology to reduce their costs and deliver goods and services to customers at an amazing speed.

The cumulative impact of new technology is so dramatic that at a broader level, organizations are changing the way they do business. Use of the Internet to transact business has become so common-place for both large and small companies that e-commerce is rapidly becoming the organizational challenge of the new millennium.

Managing virtual corporations and virtual workers in this technology-driven world is going to pose tough challenges for managers in the years ahead. A virtual organization is a network of companies or employees connected by computers. It is a highly flexible, temporary organization formed by a group of companies that join forces to exploit a specific opportunity. After all technologies are changing so quickly and skills are becoming so specialized these days that no one company can everything by itself. So they join forces to form a virtual outfit, consisting of knowledge workers from different parts of the world.

Virtual workers work from home, hotels, their cars, or wherever their work takes them. Managers need to develop new skills in order to deal with knowledge workers who work on common projects on a temporary basis without any face to face interaction. Virtual, teams have to be built from scratch paying attention to their unique requirements. The concept of employment needs to be replaced by the concept of ‘partnership’ especially when most tend to work independently away from the permanent employees or owners of the organisation.

Temporariness:

To compete with global players, firms have realized the importance of remain­ing lean, fit and flexible. Companies have learnt, after having seen the ups and downs in economic cycle quite frequently in recent years, the art of living for the day. There is evidence of temporariness in almost everything and any­thing organizations do today. Jobs are redesigned, more and more tasks are handled by flexible teams, and non-core activities are shifted to sub-contractors and temporary workers.

Workers are made to update their knowledge and acquire new skills in sync with the changing dynamics of the workplace. Most employees are made to learn everything so as to slip into roles that are loosely defined. Global competition is putting pressure on most companies to shut operations of businesses-almost instantaneously—that have failed to live up to expectations of customers. In a dynamic world characterized by variety, complexity and unpredictability, companies have to run the show in a flexible and spontaneous manner.

The New Employment Relationship and the Role of Managers:

The relationship between the employer and the employees has undergone a radical change in the 21st century. The employer has a compelling reason to bring down costs, remain competitive, and offer the best products and services to get past competition. To attract talent, he is willing to offer a chal­lenging job, come out with an attractive compensation package and bombard the prospective job seekers with benefits and concessions that were never heard of before. But not job security.

When there is an economic downturn or when the employee is not contributing enough the employer wants the headcount to be cut down to size, without any hesitation. The employee, on the other hand, is looking for a rewarding job, full of challenge, excitement and fun. He is constantly on the look out to get past rivals and reach a top position—sometimes, by any means. The moment he finds an irresistible opportunity outside, he is prepared to shift gears and change positions.

In this competitive environment, traditional ideas such as commitment to the job, loyalty to a company and remaining faithful to a work group do not seem to excite anyone in the job market. It is more or less a contractual arrangement now between the employer and the employee—in place of a lifelong commitment of service to each other. Both parties exhibit a pronounced preference for flexibility in thinking as well as actions. The employer is will­ing to pay more for quality.

The employee is willing to go that extra mile to improve his career prospects. The employer has to invent ways and means to attract talent. Training opportunities, profit sharing plans, extra bonuses, two way communications, flexible work arrangements are all part of that strategy. This is where HR managers are expected to play a strategic role, using their “soft skills” to good advantage.

They have to go beyond the rule book, find out what the employees want, customize job offers that are in sync with expectations of job seekers, put talented employees on jobs that are challenging, motivate people to give their best, develop employee skills and knowledge constantly, and explore creative paths to enrich campus atmosphere.

Managing knowledge workers is not going to be easy, especially when every company knows that talent is going to be the key differentiator between a successful company and an unsuccessful one. (‘What it means to be a Strategic HR leader in the 21st Century”, SHRM Foundation, 2003)