A workforce with superior skills is a primary source for sustainable competitive advantage. Organizations use training and development to sustain competitive advantage through continuous learning. Organizations can buy skills through hiring, or they can develop skills through training and development (T&D) activities. T&D becomes the critical factors to create readiness and flexibility for change across all organizational levels, and there are strong linkages between all facets of the T&D system and the strategic leadership and planning processes of the business. Readiness and flexibility are achieved largely through supervisory, management, and executive training, as these individuals set the boundaries for modification and continuous improvement of existing organizational practices.
For some organization, investment in T&D is presumed low in market return, as it thought that after the training, employee will not stay long enough to generate the dividen. Anxiety of the long term engagement with employee will make a major set back in T&D program, however ensuring that knowledge transfer is done sufficiently will provide additional insurance to the investment.
As companies assess employees' developmental needs and begin making plans to deliver T&D, an important consideration is T&D transfer. Transfer refers to the degree of continuity between learning in the T&D context, and behaviors and results in the job environment. There are three basic approaches to maximizing transfer:
1) overlap between T&D and job contexts,
2) integration between T&D and other elements of the human resource management system,
3) integration of management into the T&D process.
1) Overlap between T&D and job contexts,
The first critical requirement for transfer is an overlap between learning in training, and requirements on the job. The overlap assures that the knowledge, abstract concepts, attitudes, or behaviors acquired through T&D match the strategic business needs. The relevance of T&D content is enhanced when there is an obvious connection between T&D objectives and the strategic mission and goals of the organization; such relevancy enhances transfer. However, linking the T&D programs with the business strategy is the most important strategy. Similarity of the training content with the job environment is also important. The simplest way to maximize overlap between the job and training environments is through on-the-job training. Even though most T&D occurs away from the job, there is a noticeable trend toward incorporating learning into the job itself. Taking people off the job to learn is simply becoming too costly. On-the-job T&D reduces downtime, eliminates travel costs, maximizes content relevance, and increases the likelihood that the learning will become embedded into routine processes and interactions among colleagues. Moreover, the learning process and is able to facilitate and reinforce the continuation of the desired behaviors. Most of the training comes from experiential learning.
2) Integration between T&D and other elements of the human resource management system,
A second transfer strategy is making T&D part of human resource framework that systematically hires, promotes, develops, and rewards people using a core set of competencies and behaviors. Such continuity across HR systems helps translate T&D learning into behaviors and results on the job.
Organization can uses a single integrated HR system in which critical competencies are derived from job analyses. These critical competencies drive all HR subsystems and serve as the common underlying competency framework for selection, promotion, and reward decisions, and for establishing T&D requirements for a given job.
Supervisory trainees are held accountable for improved performance following training, as part of their performance appraisals. Transfer is greatly encouraged when promotion decisions are predicated on evidence of T&D transfer, for example, that the trainee's performance appraisal documents that he or she is successfully applying newly acquired skills.
Pay-for-knowledge systems are also a way to translate T&D into results on the job.
Another strategy that integrates T&D with other HR functions is structured career path. Individuals receive T&D at critical junctures in their careers, and it is reinforced through their career progression.
3) Integration of management into the T&D process.
The third transfer mechanism recognizes that it is not enough that co-workers and supervisors are passive observers of the trainee's improvement following T&D. To ensure transfer, they must be involved in pro-actively supporting knowledge based and behavioral improvements from T&D. Involving management in all aspects of T&D is critical in obtaining this level of support.
As an example, organization can implements T&D sequentially across the organization, from the top down. Everyone receives the T&D twice, once as trainee and once as trainer to his/her direct reports or peers. This will result to that every manager knows how to support the new behaviors, and no manager is surprised by behavioral changes in the workplace that come as a result of training. In the other hand, organization can use line managers as the primary deliverers of T&D. Training sessions were conducted by line managers, many of whom is assigned as a trainers and training is not a dead-end career choice for these managers, they can become executives.
As an alternative organizations can provide managers with written or video reports summarizing the content of employees' T&D and suggesting strategies to reinforce learning. Managers also are held accountable for the returns on investment in T&D, around behaviors and results directly tied to T&D objectives. Finally, management is involved through the active planning of T&D with employees. Another suggestion is building a "partnership" between learners and their supervisors, who meet together before and after T&D to go over expectations and results. The process can be made explicit through pre-T&D "contracts" between employees and their managers. Expected T&D results are specified, including how they will be monitored and facilitated, and a trainee re-entry plan is designed to create continuity between learning in the T&D environment and behaviors and results on the job.
Showing posts with label Management Systems. Show all posts
Showing posts with label Management Systems. Show all posts
Saturday, October 18, 2008
Monday, September 22, 2008
Industrial Evolution
Industries evolve through a complex process of perpetual transformation. Industrial transformation has many of the defining characteristics of evolution. It is a dynamic process of development affected by both random and systematic forces. Innovation is at the core of transformation process, it is the way firms’ metamorphoses in order to compete with rivals, and is correlating with profitability. Firms which are not innovative will not sustain the competition and are more likely to die.
A dead company will exit the industry. There are types of two exits for a company:
The process of Industrial Evolution
The treat of competition induces firms to develop themselves and force them to decide in innovation, advertising, brands and skills development. The effectiveness of those investments affects productivity, growth rates and the size of firms. Thus firms which had bad hand by nature can increase the survival through prudent decisions with regards to their innovation strategies or marketing expenditures.
The process involves a complex set of mechanisms which are governed by both systematic and random forces. Firms with persistently bad performances in cash flow, will be unable to service their debt and more likely to die. There are exogenous events, which are random with respect to firm’s potential, macroeconomic event (recession or oil price hikes), scientific discoveries and changes in political or regulatory environment.
A Normative Typology of Firm Survival
This stylized conceptual framework of industrial evolution is positive in nature. Industries evolve efficiently if the deaths of the firms are economically desirable. A ‘good’ firm (Superstars) is one which is either currently a highly productive firm or will be highly productive in future due its capacity to learn, innovate and grow. A ‘bad’ (Deficient) firm is one which has low productivity currently and will continue to do so in the future because it is resistant to change and has low innovative capability. Government should be concerned only about the death of ‘good’ firms. Efficient industrial evolution requires the survival of both current high productivity firms and potential high productivity firms. While Complacent firms are one which high productivity but are resistant to change and no longer innovative. Potential stars firm is one which low productivity and are highly innovative to try to improve.
There is strong evidence that current productivity is an important selection filter; the literature consistently finds a positive relationship between survival and proxy variables for current productivity such as age and size at birth. Selection through firm death is not totally random with respect to underlying productivity, but positively reinforces improvements to overall industry performance. However, empirically there is no consensus that innovative activity is an important selection filter. If death depends on productivity, current low productivity (or poor cash flow) innovators will die before their efforts are recognized by the market. Strong positive correlation between innovation and productivity is common but not universal. The relationship between innovation and survival is complex. Some firms may successfully innovate and become superstars, while others will be less successful and perhaps move into the deficient quadrant (from where exit is most likely). The primary public policy concern should be with the premature death of ’potential stars’, but the whole process of innovation is uncertain. Death can be due to factors external to the firm and unrelated to the firm’s intrinsic capabilities.
The presence of superstar firms is unambiguously good, but these firms do not create public policy concern since they are likely to survive into the future. The deficient firms which have low levels of innovative capability are not likely to create any significant public policy concern if they exit.
Complacent firms are those firms that currently have high productivity levels (presumably due to previous innovative activity), but are now resistant to change, may be able to live off their previous successes for some time, however their performance will deteriorate as new rivals enter the industry and slowly but surely undermine their profitability.
The death of potential stars is macroeconomic conditions. Aggregate demand, interest rates, unemployment are factors which strongly affect survival, especially for new firms. It is estimated that industries such as mining, construction, wholesale trade, transport and storage, cultural and recreational services are more sensitive to high interest rates or low aggregate economic growth than other industries. This evidence reinforcing the need for governments to maintain stable macroeconomic policy settings. In theory, efficient industry evolution occurs when firms with both low productivity and low innovative capability are the only firms which exit. Available evidence suggests that the low productivity firms which have the most potential to improve (new and innovative) are also most susceptible to death during the period of adverse macroeconomic conditions, accordingly, the death of such firms in this circumstance is likely to hinder efficient industrial evolution.
A dead company will exit the industry. There are types of two exits for a company:
- Permanent exits (business cessations), business failure.
- Temporary exits (mergers and take overs), rebirth which may in fact is a cause of business success.
The process of Industrial Evolution
The treat of competition induces firms to develop themselves and force them to decide in innovation, advertising, brands and skills development. The effectiveness of those investments affects productivity, growth rates and the size of firms. Thus firms which had bad hand by nature can increase the survival through prudent decisions with regards to their innovation strategies or marketing expenditures.
The process involves a complex set of mechanisms which are governed by both systematic and random forces. Firms with persistently bad performances in cash flow, will be unable to service their debt and more likely to die. There are exogenous events, which are random with respect to firm’s potential, macroeconomic event (recession or oil price hikes), scientific discoveries and changes in political or regulatory environment.
A Normative Typology of Firm Survival
This stylized conceptual framework of industrial evolution is positive in nature. Industries evolve efficiently if the deaths of the firms are economically desirable. A ‘good’ firm (Superstars) is one which is either currently a highly productive firm or will be highly productive in future due its capacity to learn, innovate and grow. A ‘bad’ (Deficient) firm is one which has low productivity currently and will continue to do so in the future because it is resistant to change and has low innovative capability. Government should be concerned only about the death of ‘good’ firms. Efficient industrial evolution requires the survival of both current high productivity firms and potential high productivity firms. While Complacent firms are one which high productivity but are resistant to change and no longer innovative. Potential stars firm is one which low productivity and are highly innovative to try to improve.
There is strong evidence that current productivity is an important selection filter; the literature consistently finds a positive relationship between survival and proxy variables for current productivity such as age and size at birth. Selection through firm death is not totally random with respect to underlying productivity, but positively reinforces improvements to overall industry performance. However, empirically there is no consensus that innovative activity is an important selection filter. If death depends on productivity, current low productivity (or poor cash flow) innovators will die before their efforts are recognized by the market. Strong positive correlation between innovation and productivity is common but not universal. The relationship between innovation and survival is complex. Some firms may successfully innovate and become superstars, while others will be less successful and perhaps move into the deficient quadrant (from where exit is most likely). The primary public policy concern should be with the premature death of ’potential stars’, but the whole process of innovation is uncertain. Death can be due to factors external to the firm and unrelated to the firm’s intrinsic capabilities.
The presence of superstar firms is unambiguously good, but these firms do not create public policy concern since they are likely to survive into the future. The deficient firms which have low levels of innovative capability are not likely to create any significant public policy concern if they exit.
Complacent firms are those firms that currently have high productivity levels (presumably due to previous innovative activity), but are now resistant to change, may be able to live off their previous successes for some time, however their performance will deteriorate as new rivals enter the industry and slowly but surely undermine their profitability.
The death of potential stars is macroeconomic conditions. Aggregate demand, interest rates, unemployment are factors which strongly affect survival, especially for new firms. It is estimated that industries such as mining, construction, wholesale trade, transport and storage, cultural and recreational services are more sensitive to high interest rates or low aggregate economic growth than other industries. This evidence reinforcing the need for governments to maintain stable macroeconomic policy settings. In theory, efficient industry evolution occurs when firms with both low productivity and low innovative capability are the only firms which exit. Available evidence suggests that the low productivity firms which have the most potential to improve (new and innovative) are also most susceptible to death during the period of adverse macroeconomic conditions, accordingly, the death of such firms in this circumstance is likely to hinder efficient industrial evolution.
Total Productive Maintenance
Maintenance is critical to a firm's ability to successfully compete in the market not only on the basis of quality and delivery, but also on the basis of cost. Total Productive Maintenance (TPM) reduces total maintenance costs by involving the operators in routine maintenance. TPM increases equipment reliability without increasing costs by involving everyone in the maintenance process. The increased in equipment reliability helps create internal capabilities that provide the firm a competitive advantage. TPM fundamentally changes a firm's infrastructure to create the capabilities that lead to a competitive advantage. Top management and mid-level management support is essential to successfully implement TPM since the design of jobs, human resource practices and management techniques will need to change. TPM requires that the basic planning and control systems be adequate before it is implemented. Since each maintenance activity costs less, a firm can perform more maintenance activities cost effectively.
Maintenance is not an expense; it is an investment in improved manufacturing. Investment in maintenance, one of the basic functions of a firm, returns improved quality, safety, dependability, flexibility and lead times. Maintenance is a full partner striving together with the other functions to achieve the firm's strategic goals. The integration of maintenance with other functions is accomplished with Total Productive Maintenance (TPM), which was introduced in 1971 in Japan to provide a competitive advantage to those adopting it.
The classical view of maintenance is that all maintenance is performed by a set of specialists (i.e., maintenance engineers and technicians). In this view, the optimal level of maintenance occurs at the point of minimal total maintenance costs-the point where the sum of the cost of equipment losses and maintenance activity costs is minimized. The manager's role is to limit maintenance activities to those necessary to keep equipment losses at this minimum point. TPM aimed to reduce equipment breakdowns without increasing the total cost of maintenance.
TPM is a systematic approach to understand the equipment's function, the equipment's relationship to product quality and the likely cause and frequency of failure of the critical equipment components. TPM reduces equipment losses by investing in people who can then improve equipment availability, improve product quality and reduce labor costs. To maximize equipment effectiveness TPM establishes a thorough system of maintenance for the equipment's entire life span. This TPM system requires all employees working in autonomous small groups to work together to eliminate equipment breakdowns. Everyone is involved since every component of the manufacturing system-including operations, product design, and process design and management-impacts equipment maintenance. As suggested by researcher, there are six categories of equipment losses throughout production system:
1. Equipment failures.
2. Setup and adjustment.
3. Idling and minor stoppages.
4. Reduced speed.
5. Defects in the process
6. Reduced yield.
The competitive advantages of improved quality, improved delivery and increased flexibility would be nullified if they were obtained with excessive maintenance investments, which could make a firm's costs noncompetitive. TPM increases maintenance activities without increased costs. The high costs of maintenance activity often comes from inadequate planning of support requirements for machines, inadequate consideration of the machine's reliability, ignorance of the relationship of maintainability to machine design and poor design of logistic support capability. TPM directly addresses these issues by involving all of the functions in creating the solution.
The initial TPM steps may be done with a minimal amount of organizational change by implementing minor improvements such as identifying and tracking the causes of breakdowns. To fully implement, TPM requires that most companies undergo substantial change. The firm's ability to achieve its goal of increased equipment reliability is determined by its ability to coordinate its human resource practices, management policies and technology. For managers to quickly diagnose the TPM program's progress, researcher suggests that small groups categorize and record the time they spend on different activities (e.g., education, training and maintenance).
Management must determine:
Successful implementation of TPM may require a change in performance measures, such as:
Maintenance is not an expense; it is an investment in improved manufacturing. Investment in maintenance, one of the basic functions of a firm, returns improved quality, safety, dependability, flexibility and lead times. Maintenance is a full partner striving together with the other functions to achieve the firm's strategic goals. The integration of maintenance with other functions is accomplished with Total Productive Maintenance (TPM), which was introduced in 1971 in Japan to provide a competitive advantage to those adopting it.
The classical view of maintenance is that all maintenance is performed by a set of specialists (i.e., maintenance engineers and technicians). In this view, the optimal level of maintenance occurs at the point of minimal total maintenance costs-the point where the sum of the cost of equipment losses and maintenance activity costs is minimized. The manager's role is to limit maintenance activities to those necessary to keep equipment losses at this minimum point. TPM aimed to reduce equipment breakdowns without increasing the total cost of maintenance.
TPM is a systematic approach to understand the equipment's function, the equipment's relationship to product quality and the likely cause and frequency of failure of the critical equipment components. TPM reduces equipment losses by investing in people who can then improve equipment availability, improve product quality and reduce labor costs. To maximize equipment effectiveness TPM establishes a thorough system of maintenance for the equipment's entire life span. This TPM system requires all employees working in autonomous small groups to work together to eliminate equipment breakdowns. Everyone is involved since every component of the manufacturing system-including operations, product design, and process design and management-impacts equipment maintenance. As suggested by researcher, there are six categories of equipment losses throughout production system:
1. Equipment failures.
2. Setup and adjustment.
3. Idling and minor stoppages.
4. Reduced speed.
5. Defects in the process
6. Reduced yield.
The competitive advantages of improved quality, improved delivery and increased flexibility would be nullified if they were obtained with excessive maintenance investments, which could make a firm's costs noncompetitive. TPM increases maintenance activities without increased costs. The high costs of maintenance activity often comes from inadequate planning of support requirements for machines, inadequate consideration of the machine's reliability, ignorance of the relationship of maintainability to machine design and poor design of logistic support capability. TPM directly addresses these issues by involving all of the functions in creating the solution.
The initial TPM steps may be done with a minimal amount of organizational change by implementing minor improvements such as identifying and tracking the causes of breakdowns. To fully implement, TPM requires that most companies undergo substantial change. The firm's ability to achieve its goal of increased equipment reliability is determined by its ability to coordinate its human resource practices, management policies and technology. For managers to quickly diagnose the TPM program's progress, researcher suggests that small groups categorize and record the time they spend on different activities (e.g., education, training and maintenance).
Management must determine:
- Whether all the group members have mastered the techniques.
- Whether the group proposes and implements improvements.
- Whether the group solves problems.
- Whether the group works independently to achieve its goals.
- Whether the maintenance activities in the standardized maintenance program are completed.
Successful implementation of TPM may require a change in performance measures, such as:
- What types of performance measures are being used now?
- Is there an incentive for the maintenance worker to train the operator?
- Is there an incentive for the operator to notify and or help the maintenance worker?
Saturday, July 12, 2008
ERP Sucks ......
This is the feedback gotten from the "organics worker" who are supposed to run the program, means the "end users" reporting to "key users".
The new ERP system is installed, orders get placed, product is shipped, and invoices get paid. Yet no one is really happy with the results.
Customer satisfaction is unchanged and profits don’t increase. Ironically, quality of life at work declines while employees climb the learning curve. Finally, the company continues to struggle against competition.
What happened? Which are the causes? The most frequent situation is when the ERP vendor’s selection criteria are based mostly on the product features, covering less or not at all the implementation. For some managers installation and implementation are the same, which is an expensive confusion. The goal of an installation is move from one software to another, with a minimum of disruption. The goal of an implementation is to enable a company to achieve significant business goals as the result of a carefully planned transformation of its business processes, supported by appropiate software and technologies.
Computerizations are suppose to simplify our work and improving our quality of life.
It is true if implemented correctly, but in the big project like ERP implementation, the quality of team work and team player is very important.
In the team work, the commitment of each players are craved and need to be shown to the other players.
What is ERP
It is an integrated systems comprised modules for Finance, Logistics and Manufacturing, allowing for the management of purchases, sales, stocks, production etc. These solutions were referred to as Enterprise Resource Planning since they permitted the stage elaboration and integrated administration of the company major resources (finance, fixed inventory, materials, human resource) and the associated processes. [ING BARING 1997].
Benefits of ERP Implemetation to the way companies are managed as explained by JOHN GUNSON and JEAN-PAUL de BLASIS
• Reduction in effort for the collect and input of data : immediate input at the moment of the transaction.
• Possibility to interrogate in real time and at distance integrated information from different functions.
• Discipline and uniformity applied to processes and working methods.
• Breaking down of function and geographic barriers.
• Real time aid to decision-making; for example better visibility of stocks, leading to higher service level to the customer.
• Integration of activities, from the taking of the order through to the planning of production; from warehouse picking and dispatch through to invoicing; the transactions being automatically recorded in an accounting format.
A successful ERP implementation led to a simplification of management processes.
Key Success Factors in Implementing ERP
The need for a Project Sponsor.
If the project (the ERP implementation) is associated with a person - a person responsible for a business unit concerned, a person who hierarchically and by personal charisma is forceful, known , respected, liked throughout the company this helps to assure project success. This person is seen to be associated and permanently associated with the project, irrespective of perceived success or failure at any moment in time.
A strong management commitment.
Top Management, and their continued involvement, support, commitment, mobilization is vital.
Identification of a Project Coordinator/ Project Manager.
This was the I.T. Manager, this makes sense as I.T. is highly involved and later will be instrumental in data conversion, interfaces and modifications.
A strong business case for the Project.
If the reason for adopting an ERP solution is purely to align an affiliate with a Head Office choice, or with a hidden or open agenda to reduce the number of personnel, to centralize control and reporting so that a local management is brought to line or if simply the business needs are secondary - these ‘motivations’ can add to resistance either from the start or at a later date. This resistance can be manifest or latent; in both cases the consequences in terms of cost, delay, implementation quality could be major.
Clear vision.
Need to have a clear idea of what is wanted as an end result. These objectives will translate later into needs requirements, into measures checks and balances control, and a means of calculating a return on investment (financial/non-financial).
Re engineering, Rethinking; Change and Change Management; Benchmarking and Best Practices.
Encourage the change of existing structure and method where applicable.
The Risk of Failure
Here are the most important problems as explained by Luminita Hurbean from West University of Timisoara
• lack of ERP training and education;
• lack of in-house expertise in ERP;
• lack of clear goals for ERP effort;
• lack of companywide support and involvement (resistance to change);
• lack of top management commitment and support;
• lack of data accuracy.
The new ERP system is installed, orders get placed, product is shipped, and invoices get paid. Yet no one is really happy with the results.
Customer satisfaction is unchanged and profits don’t increase. Ironically, quality of life at work declines while employees climb the learning curve. Finally, the company continues to struggle against competition.
What happened? Which are the causes? The most frequent situation is when the ERP vendor’s selection criteria are based mostly on the product features, covering less or not at all the implementation. For some managers installation and implementation are the same, which is an expensive confusion. The goal of an installation is move from one software to another, with a minimum of disruption. The goal of an implementation is to enable a company to achieve significant business goals as the result of a carefully planned transformation of its business processes, supported by appropiate software and technologies.
Computerizations are suppose to simplify our work and improving our quality of life.
It is true if implemented correctly, but in the big project like ERP implementation, the quality of team work and team player is very important.
In the team work, the commitment of each players are craved and need to be shown to the other players.
What is ERP
It is an integrated systems comprised modules for Finance, Logistics and Manufacturing, allowing for the management of purchases, sales, stocks, production etc. These solutions were referred to as Enterprise Resource Planning since they permitted the stage elaboration and integrated administration of the company major resources (finance, fixed inventory, materials, human resource) and the associated processes. [ING BARING 1997].
Benefits of ERP Implemetation to the way companies are managed as explained by JOHN GUNSON and JEAN-PAUL de BLASIS
• Reduction in effort for the collect and input of data : immediate input at the moment of the transaction.
• Possibility to interrogate in real time and at distance integrated information from different functions.
• Discipline and uniformity applied to processes and working methods.
• Breaking down of function and geographic barriers.
• Real time aid to decision-making; for example better visibility of stocks, leading to higher service level to the customer.
• Integration of activities, from the taking of the order through to the planning of production; from warehouse picking and dispatch through to invoicing; the transactions being automatically recorded in an accounting format.
A successful ERP implementation led to a simplification of management processes.
Key Success Factors in Implementing ERP
The need for a Project Sponsor.
If the project (the ERP implementation) is associated with a person - a person responsible for a business unit concerned, a person who hierarchically and by personal charisma is forceful, known , respected, liked throughout the company this helps to assure project success. This person is seen to be associated and permanently associated with the project, irrespective of perceived success or failure at any moment in time.
A strong management commitment.
Top Management, and their continued involvement, support, commitment, mobilization is vital.
Identification of a Project Coordinator/ Project Manager.
This was the I.T. Manager, this makes sense as I.T. is highly involved and later will be instrumental in data conversion, interfaces and modifications.
A strong business case for the Project.
If the reason for adopting an ERP solution is purely to align an affiliate with a Head Office choice, or with a hidden or open agenda to reduce the number of personnel, to centralize control and reporting so that a local management is brought to line or if simply the business needs are secondary - these ‘motivations’ can add to resistance either from the start or at a later date. This resistance can be manifest or latent; in both cases the consequences in terms of cost, delay, implementation quality could be major.
Clear vision.
Need to have a clear idea of what is wanted as an end result. These objectives will translate later into needs requirements, into measures checks and balances control, and a means of calculating a return on investment (financial/non-financial).
Re engineering, Rethinking; Change and Change Management; Benchmarking and Best Practices.
Encourage the change of existing structure and method where applicable.
The Risk of Failure
Here are the most important problems as explained by Luminita Hurbean from West University of Timisoara
• lack of ERP training and education;
• lack of in-house expertise in ERP;
• lack of clear goals for ERP effort;
• lack of companywide support and involvement (resistance to change);
• lack of top management commitment and support;
• lack of data accuracy.
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