Category Archives: Management

Using Short Meetings to Stay on Track and In Touch

As companies grow and bring on more and more employees and add new hierarchical levels it becomes increasingly difficult to maintain the entrepreneurial culture and atmosphere that existed when the business was first launched and everyone worked in the same room.  Moreover, the elaborate organizational structure that emerges when the company grows is accompanied by greater risk of breakdowns in communication.  Many companies respond to these issues by scheduling lengthy meeting and retreats; however, these sessions can be costly and are often seen as unproductive.  An alternative should be considered is regularly scheduled short meetings—no more than 15 minutes—of all employees to interact and communicate on specific topics of immediate concern and value to the business.  The format can be customized to the needs of the particularly company and ideas might be gathered from the following examples:

 

  • Each participant can quickly identify his or her one or two main priorities for the day and others can then provide information to assist in accomplishing those priorities or even change their own plans if necessary to facilitate completion of what appear to be the most important projects from a company-wide perspective.  For example, if the procurement department is having trouble with a vendor the CEO or CFO may offer to get involved immediately to ensure that the supply chain is not compromised.  If the manufacturing department reports that it is having problems with certain equipment the sales group can quickly contact customers to discuss necessary changes in delivery schedules.
  • Senior managers can report on what areas they intend to focus on during the day and thus provide those reporting to them with an idea of what the current priorities might be among the company leaders.  Interestingly, this process also provides the CEO with an insight into certain attributes of the management and communications styles of the members of the executive team.  A CEO may discover that a group head is spending too much time micro-managing the work of his or her subordinates and may need to work with that person to clarify what the proper objectives should be.  A tendency of a senior manager to horde information in these meetings may also signal problems that the CEO will need to address before coordination and communications issues surface.
  • Salespersons can be required to report all new accounts, or significant new opportunities with existing accounts, so that managers and employees in other departments can mobilize quickly to provide support directly to the customer.  The key to this process is using the information provided by the salespersons to quickly reach a consensus on which accounts are most important on that particular day.  This allows everyone to shift their priorities and narrow the focus of their activities for the remainder of the day.
  • Having employees mention any significant appointments with vendors or customers, or other anticipated absences from the office, allows others who need to speak with these employees to re-arrange their own schedules to avoid conflicts with the appointments or absences.  The byproduct is more efficient communication and a reduction in the time lost waiting for someone who is otherwise occupied to respond on a particular project.  In many cases employees find that a simple five minute face-to-face conversation right after the meeting accomplishes more than a string of e-mails and voicemails that extend over the course of an entire day or even longer.
  • Rather than simply be a recital of “to do” lists, important as that may be, companies with a larger number of employees may use the meeting to disseminate information about the overall performance of the business and the specific activities of particular groups or departments.  Senior management may identify particular key performance indicators that can be updated and discussed at regular intervals.  This gives all employees a chance to feel move involved with the company’s overall direction and perhaps offer their own ideas on how performance can be improved.  The meeting can also be used as an opportunity to recognize and celebrate different employees for their activities.

In addition to meetings with all employees, the CEO may convene short daily summits with a smaller group consisting of all of the members of the senior management team solely to focus on progress against, and their activities relating to, the company’s overall strategic business plan.  The purpose of these meetings is identify what the senior managers have been doing to achieve specific quarterly and annual goals and objectives and to allow the CEO to evaluate their performance and determine whether there are any significant issues or problems that might be preventing the participants from executing the activities expected of them and their subordinates as part of the strategic plan.

 

Regardless of how the meeting is structured, time limits should be ruthlessly enforced and meetings should begin and end at the same time each day so that the exercise becomes part of the organizational culture of the company.  The focus should be on communicating, prioritizing and perhaps celebrating company performance and the utility should be obvious to all in attendance.  These meetings should not become strategy sessions; however, they should be efficient enough to mop up all the nitty-gritty issues that can get in the way of the serious brainstorming and long-term problem solving that should occur when and if a strategy meeting is convened.

Project Management in Small High Technology Firms

Project management is important for companies and this certainly applies to small- and mid-sized firms challenging larger enterprises in a dynamic environment characterized by intense competition, globalization and customer demands for quality and timeliness.  A good deal of research has been done on project management in larger organizations; however, relatively little has been written about project management techniques in smaller companies with much more limited resources.  One exception is a paper written by Murphy and Ledwith that reported the results of a survey of more than 100 owner/managers of small high technology businesses in Ireland regarding various issues and techniques associated with their attempts to implement project management systems and techniques.

Key findings of the survey, as well as a review of related empirical studies by the authors of the paper, included the following: the critical criteria for assessing whether a project was “successful” included time, cost, quality and client satisfaction; the critical factors that contributed to the “success” of a project included top management support, clear goals and objectives, planning and control, resource allocation, risk management and client consultation; respondents strongly agreed that a well defined project management process was necessary for projects to be successfully implemented and that previous experience was a key factor in implementing an effective project management system; and respondents acknowledged that large organizations approach projects in a different manner than smaller firms and that organizational structure affects project management.

Owner/managers of small firms realize that larger organizations arguably have certain advantages over smaller firms with respect to project management—greater capital and resources and greater specialization; however, they did not accept the notion that project management was too complex and costly to be used by smaller firms.  When asked for specific ideas about how project performance could be improved they suggested making sure that project tasks took priority over other work, more control of project teams, clearer goals and communications channels and more emphasis on fact finding and client input at the conception stage.  The most popular project management tools and techniques among the respondents included formal project planning software, Gantt charts, project teams and change control processes.

Compensation Philosophy

The compensation and organizational development committee plays an essential role in setting the overall tone for the company’s philosophy with respect to rewards and incentives generally and executive compensation in particular.  Among other things, the members of the committee are expected to continuously review and assess the company’s executive compensation philosophy and provide counsel and guidance to the CEO and leaders of the human resources function with respect to alternative approaches to rewarding employees for the work they perform on behalf of the company.

When preparing the statement of the company’s executive compensation philosophy the committee should begin with a description of the primary purposes of the executive compensation program, such as attracting, retaining and rewarding talented leaders who can achieve sustainable and profitable growth for the company’s businesses and maximize the long-term value of the company for its shareholders and other stakeholders.  The statement of philosophy is often broken out into several categories, each of which are considered to be important for recruiting and retaining the best people to lead the organization.  For example, realizing that qualified and experienced leaders are highly sought after it is essential that companies be prepared to offer compensation packages that are competitive, which means that the statement of philosophy should incorporate the following activities:

  • Regularly compare the company’s total compensation levels against comparable companies in each of the industries from which the company is likely to draw executive talent, with particular emphasis on salary levels and short and long term incentives, to ensure the ongoing competitiveness of our compensation program
  • Measure the competitiveness of compensation levels in the countries and regions where the company operates, and utilize compensation benchmarks from multiple geographic markets for executives with international responsibilities
  • Use median (50th percentile) compensation values reported by the company’s comparator group companies as a primary reference for establishing target amounts for each element of compensation, and for maintaining competitive total compensation levels
  • Consider factors related to the executive’s potential impact on the company’s results, scope of responsibility and accountability, and reporting structure in determining appropriate compensation levels

It is necessary, but not sufficient, for companies to offer competitive compensation arrangements to their executives.  Compensation plans must also motivate executives to consistently deliver superior performance and this means ensuring that executives have a significant proportion of total annual compensation contingent upon achieving objective measures of financial and operating performance; establishing an appropriate “mix” of compensation elements to ensure an appropriate and balanced focus on short- and long-term results; and preserving a strong and direct relationship between business and individual performance, and the short and long term compensation earned by executives.  Committees should strive to create incentive arrangement that provide executives with opportunities to achieve compensation levels comparable with the highest earners among their peers at other companies; however, incentives should be tailored so that they are aligned with the company’s long-term strategic objectives and not just winning compensation battles with competitors.

Finally, the compensation package should be built in a way that ensure that executives are properly engaged with the pursuit and achievement of the company’s long-term strategic goals and meeting the expectations of the company’s stakeholders.  Engagement provides a foundation for building a deep and committed relationship between the executive and the company and makes the executive a stronger ambassador of the company to both internal and external stakeholders.  In order to achieve engagement, the company’s executive compensation philosophy must include linking a material portion of executive compensation to measures of business performance for which the executive has direct line of sight and accountability; ensuring that the company’s compensation programs and practices encourage appropriate risk taking and discourage inappropriate risk taking; and ensuring that senior executives meaningfully share the risks and rewards of ownership with the company’s shareholders by basing a portion of their total compensation on share price performance.  While compensation arrangements have traditionally emphasized achievement of financial goals, mounting pressure from institutional investors and other stakeholders has driven companies include sustainability issues in their executive compensation philosophies and explicitly provide that sustainability performance and innovation will be tracked and that a significant element of executive rewards will be based on demonstrable success in those areas.

This article is adapted from material in Sustainability and Corporate Governance: A Handbook for Sustainable Entrepreneurs, which is prepared and distributed by the Sustainable Entrepreneurship Project and can be downloaded here.

Alan Gutterman is the Founding Director of the Sustainable Entrepreneurship Project, which engages in and promotes research, education and training activities relating to entrepreneurial ventures launched with the aspiration to create sustainable enterprises that achieve significant growth in scale and value creation through the development of innovative products or services which form the basis for a successful international business.  Visit the Project’s Library of Resources for Sustainable Entrepreneurs to download handbooks, guides, articles and other materials relating to sustainable entrepreneurship and keep up with the Project’s activities by following Alan on LinkedInTwitter and Facebook.

Introduction to Project Management

 

Project management is a tool for conducting and completing unique, one-of-a-kind projects or functions necessary for execution of the strategy of a company without disrupting what would otherwise be the normal workflow of the company.  In general, project management creates and imposes a temporary management system over the normal organizational design of the company in order to accomplish a specific task or activity.  Harold Kerzner, one of the leaders in research relating to project management, offers the following useful formal definition of project management that identifies key elements of the process: “Project management is the planning, organizing, directing, and controlling of company resources for a relatively short-term project that has been established to completed specific goals and objectives.  Furthermore, project management utilizes the systems approach to management by having functional personnel (the vertical hierarchy) assigned to a specific project (the horizontal hierarchy).”

Planning, organizing, directing and controlling are four of the five functions or activities that are normally associated with traditional management and each of these are reflected in the definition of project management set out above.  Missing from the array of activities delegated to a project manager is the responsibility for “staffing,” which is the fifth activity that is normally associated with traditional management.  The reason is that staffing remains a line responsibility and the project manager can only request resources while the final decision as to what, and how many, resources will be diverted to the project will normally be left to the line managers for each of the functions involved in the project.  There are exceptions to this rule, of course, for situations when senior management intercedes and overrides the discretion of line managers to ensure that sufficient resources are diverted to certain mission-critical projects that must take priority over day-to-day tasks and activities.

While project management pertains to “relatively short-term projects,” there is no hard and fast rule with respect to scope and duration.  For example, engineering or construction projects may be as short as six months and as long as five years.  Large projects, such as the designing, building and launching a nuclear power facility or a state-of-the-art manufacturing plan, may take as long as ten years.  For most small organizations, however, short-term projects generally must be completed within three to twelve months.

For internal projects, the relevant constraints include time, cost and performance.  When the project is done for a customer, an additional constraint – customer satisfaction – must be added.  Another thing to consider for customer-focused projects is that the customer is concerned only with results and has no real interest in how the company organizes the way in which the project is approached and completed.

The Classical Administrative School of Management

 Jones and George summarized the core principals of several of main theories associated with the “classical administrative school”.  They described Weber’s principals of bureaucracy as follows: 

  • Managers in a bureaucracy have formal authority which they derive from the position they hold in the organization.
  • Managerial authority is the legitimate power to hold people accountable for their actions and thus provides managers with the legal right to exert direction and control over the behavior of their subordinates.
  • Positions in a bureaucracy should be given to people based on their performance rather than social standing or personal contacts.
  • The formal authority and task responsibilities associated with each position in a bureaucracy, and the relationship of that position to other positions in the organization, should be clearly specified so as to ensure that everyone—managers and workers—understand exactly what is expected of them and can be held accountable.
  • Effective exercise of authority in an organization requires that positions be arranged hierarchically so that everyone knows who to report to and who reports to them.
  • Managers must create a well-defined system of rules (i.e., formal written instructions that specify actions that should be taken under different circumstances to achieve specific goals), standard operating procedures (i.e., specific sets of written instructions about how to perform a certain aspect of a task), and norms (i.e., unwritten, informal codes of conduct that govern how people should act) so that they can provide guidelines for effectively control behavior within an organization and increasing the performance of a bureaucratic system.

Jones and George commented that strong and skillful management was essential to making a bureaucratic system work and that poor management could quickly lead to the complex system of rules and procedures impeding operations and causing decision making to become slow and inefficient.

Jones and George summarized Fayol’s principles of management as follows: 

  • Division of labor: Job specialization and the division of labor should increase efficiency
  • Authority and responsibility: Managers have the right to give orders and the power to exhort subordinates for obedience
  • Unity of command: An employee should receive orders from only one superior
  • Line of authority: The length of the chain of command that extends from the top to the bottom of an organization should be limited
  • Centralization: Authority should not be concentrated at the top of the chain of command
  • Unity of direction: Operations within the organization that have the same objective should be directed by only one manager using one plan
  • Equity: Managers should be both friendly and fair to their subordinates
  • Order: Materials and people should be in the right place at the right time
  • Initiative: Subordinates should be given the freedom to conceive and carry out their plans, even though some mistakes may result
  • Discipline: Members in an organization need to respect the rules and agreements that govern the organization
  • Remuneration: Compensation for work done should be fair to both employees and employers
  • Stability of tenure of personnel: High employee turnover rate undermines the efficient functioning of an organization
  • Subordination of individual interests: Interests of employees should not take precedence over the interests of the organization as a whole
  • Esprit de corps: Promoting team spirit will give the organization a sense of unity

Finally, Jones and George emphasized the following points regarding Follett’s concerns about emphasizing the “human side of the organization” and encouraging managers to involve their subordinates in planning and decisions: 

  • Workers are the people who know the most about their jobs and they should be involved in job analysis and participate with their managers in the work development process.
  • Provided that workers have the relevant knowledge, they, rather than their managers, should be in control of the work process and the role of managers should be limited to coaching and facilitating.
  • Organizations should rely upon cross-departmental teams composed of persons from different functional departments to carry out required projects.
  • Leadership should be based on knowledge and expertise rather than upon formal authority given to a manager based on his or her position in the hierarchy.
  • Power and authority in the organization should be fluid and flow to those persons who are best able to assist the organization in achieving its goals.

Jones and George commented that Follett’s approach was considered to be quite radical during her time and clearly her principals flew in the face of much of what Taylor advocated in pushing organizations to adopt “scientific management”.  For example, scientific management had no place for worker input into job analysis.  Not surprisingly, most organizations operating at the time Follett was writing continued to embrace Taylorism; however, Follett’s ideas regarding “cross-functioning”, the creation and use of cross-departmental teams, are now commonly applied by managers and modern organizations also rely heavily on self-managed teams and empowerment initiatives that allow employees to contribute their knowledge and expertise.

Source: G. Jones and J. George, Essentials of Contemporary Management (6th Ed) (New York: McGraw-Hill Professional Publishing, 2014), Appendix A (“History of Management Thought”) to Chapter 1.

Taylor’s Four Core Principles of Scientific Management

Jones and George observed that Taylor believed that the systematic study of the relationships between people and tasks using “scientific management” techniques, rather than intuition or informal rule-of-thumb knowledge, was the best way to determine the most efficient division of labor and capitalize on the advantages of using specialization in the production process.  In general, Taylor pushed for employers to take steps to reduce the amount of time and effort expended by workers in producing a unit of output and Jones and George summed up the four core principles of “scientific management” that Taylor developed from his experiments and observations as follows: 

  • Study the way workers perform their tasks, gather all the informal job knowledge possessed by workers, and experiment with ways of improving the way tasks are performed to increase efficiency.
  • Codify the new methods of performing tasks into written work rules and standard operating procedures
  • Carefully select workers to ensure that they possess the skills and abilities that match the needs of the task and train them to perform the tasks according to the established rules and procedures.
  • Establish a fair or acceptable level of performance for a task and then develop a pay system that provides a higher reward for performance above the acceptable level.

Jones and George noted that scientific management was widely known and practiced by 1910.  For example, executives at Ford Motor Company celebrated that scientific management had allowed them to achieve the right mix of worker-task specialization and align people and tasks with the desired speed of the production line.  Franklin Motor Company reported that it had redesigned its work process using scientific management principles and had seen daily production averages increase from 45 to 100 vehicles.  At the same time, however, scientific management was subject to widespread criticism from individual workers and the unions that represented them.  Among the problems reported by Jones and George were the failure of employers to shares gains in productivity and performance with workers in the form of bonuses; increased job dissatisfaction due to job redesign that resulted in specialized, simplified jobs that were monotonous and repetitive; unreasonable expectations from managers who believed that as performance improved workers should do even more work for the same pay; and concerns among workers that advances in productivity would reduce the number of workers required and eventually lead to employers pushing to reduce their workforces through layoffs.  While Jones and George concluded that selective application of scientific management principles often did more harm than good, Taylor’s theories had an enduring influence on management of production systems. 

Source: G. Jones and J. George, Essentials of Contemporary Management (6th Ed) (New York: McGraw-Hill Professional Publishing, 2014), Appendix A (“History of Management Thought”) to Chapter 1.

 

Taylor's Four Core Principles of Scientific Management

Jones and George observed that Taylor believed that the systematic study of the relationships between people and tasks using “scientific management” techniques, rather than intuition or informal rule-of-thumb knowledge, was the best way to determine the most efficient division of labor and capitalize on the advantages of using specialization in the production process.  In general, Taylor pushed for employers to take steps to reduce the amount of time and effort expended by workers in producing a unit of output and Jones and George summed up the four core principles of “scientific management” that Taylor developed from his experiments and observations as follows: 

  • Study the way workers perform their tasks, gather all the informal job knowledge possessed by workers, and experiment with ways of improving the way tasks are performed to increase efficiency.
  • Codify the new methods of performing tasks into written work rules and standard operating procedures
  • Carefully select workers to ensure that they possess the skills and abilities that match the needs of the task and train them to perform the tasks according to the established rules and procedures.
  • Establish a fair or acceptable level of performance for a task and then develop a pay system that provides a higher reward for performance above the acceptable level.

Jones and George noted that scientific management was widely known and practiced by 1910.  For example, executives at Ford Motor Company celebrated that scientific management had allowed them to achieve the right mix of worker-task specialization and align people and tasks with the desired speed of the production line.  Franklin Motor Company reported that it had redesigned its work process using scientific management principles and had seen daily production averages increase from 45 to 100 vehicles.  At the same time, however, scientific management was subject to widespread criticism from individual workers and the unions that represented them.  Among the problems reported by Jones and George were the failure of employers to shares gains in productivity and performance with workers in the form of bonuses; increased job dissatisfaction due to job redesign that resulted in specialized, simplified jobs that were monotonous and repetitive; unreasonable expectations from managers who believed that as performance improved workers should do even more work for the same pay; and concerns among workers that advances in productivity would reduce the number of workers required and eventually lead to employers pushing to reduce their workforces through layoffs.  While Jones and George concluded that selective application of scientific management principles often did more harm than good, Taylor’s theories had an enduring influence on management of production systems. 

Source: G. Jones and J. George, Essentials of Contemporary Management (6th Ed) (New York: McGraw-Hill Professional Publishing, 2014), Appendix A (“History of Management Thought”) to Chapter 1.