Kunci Sukses Usaha

William A. Ward pernah berkata, "Ada empat langkah mencapai sukses, yakni perencanaan yang tepat, persiapan yang matang, pelaksanaan yang baik, dan tidak mudah menyerah." Gunakan falsafah Ward ini agar sukses. Perinciannya sebagai berikut :

· Ikuti perkembangan jaman

Bergabunglah dalam organisasi yang berkaitan dengan bisnis Anda. Banyak membaca dan gali informasi sebanyak mungkin. Internet akan banyak membantu Anda.

· Buat rencana keuangan

Catat semua pemasukan dan pengeluaran setiap harinya. Buat target jangka pendek dan jangka panjang. Jangan pernah menyerahkan kondisi keuangan pada nasib. Perhitungkan dengan matang.

· Perkirakan aliran uang tunai

Anda harus bisa memperkirakan aliran uang tunai, paling tidak tiga bulan ke depan. Jangan membuat anggarkan pengeluaran yang lebih besar dari itu.

· Bentuk dewan penasehat atau cari tenaga ahli, untuk memberi ide, saran atau kritik terhadap Anda dan produk yang ditawarkan Mereka bisa berupa teman-teman atau anggota keluarga yang dipercaya.

· Jaga keseimbangan antara kerja, santai, dan keluarga Tak perlu ngoyo, karena sesuatu yang dikerjakan dengan ngoyo, hasilnya tak akan maksimal. Lagi pula, badan dan otak butuh istirahat.

· Kembangkan jaringan (network)

Tak ada salahnya berkenalan dan bergaul dengan orang-orang yang berhubungan atau bisa mendukung bisnis Anda. Siapa tahu ada ide yang bisa digali.

· Disiplin/motivasi

Aspek terberat dalam menjalankan usaha sendiri adalah disiplin atau motivasi untuk bekerja secara teratur. Untuk mengatasinya, buatlah daftar apa saja yang harus dikerjakan hari ini dan esok. Tentukan target yang harus dicapai dalam minggu ini.

· Selalu waspada dan siap

Rajin-rajin melakukan evaluasi terhadap pasar, produk dan system pemasaran. Kalau perlu, ubah cara kerja agar lebih efisien. Perbaiki cara pemasaran atau kualitas produk.

· Cintai pekerjaan Anda

Bagaimana akan sukses, jika Anda tak punya “sense of belongin” pada pekerjaan dan produk yang dihasilkan. Cintai pekerjaan dan produksi sendiri, dan uang akan mengikuti Anda.

· Jangan mudah menyerah

Para pengusaha sukses pun pernah mengalami kegagalan. Jika ingin cepat berhasil, segeralah bangkit dan belajar dari kegagalan. Jangan bersedih terlalu lama, apalagi menyerah.

Kiat Memulai Usaha

1. START WITH A DREAM

Mulailah dengan sebuah mimpi. Semua bermula dari sebuah mimpi dan yakinkan akan produk yang akan kita tawarkan. A dream is where it all started : Pemimpilah yang selalu menciptakan dan membuat sebuah terobosan dalam produk, cara pelayanan, jasa, ataupun ide yang dapat dijual dengan sukses. Mereka tidak mengenal batas dan keterikatan, tak mengenal kata “tidak bisa” ataupun “tidak mungkin”.

2. LOVE THE PRODUCTS OR SERVICES

Cintailah Produk Anda. Kecintaan akan produk kita akan memberikan sebuah keyakinan pada pelanggan kita dan membuat kerja keras terasa ringan. Membuat kita mampu melewati masa-masa sulit. Enthusiastism and Persistence : Antusiasme dan keuletan sebagai pertanda cinta dan keyakinan akan menjadi tulang punggung keberhasilan sebuah usaha yang baru.

3. LEARN THE BASICS OF BUSINESS

Pelajarilah fundamental business. BEYOND THE “BUY LOW, SELL HIGH, PAY LATE, COLLECT EARLY”: Tidak akan ada sukses tanpa ada sebuah pengetahuan dasar untuk business yang baik, belajar sambil bekerja, turut kerja dahulu selama 1-2 tahun untuk dapat mempelajari dasar-dasar usaha akan membantu kita untuk maju dengan lebih baik. Carilah Guru yang baik.

4. WILLING TO TAKE CALCULATED RISKS

Ambillah resiko. The Gaint that u will be able to achieve is directly proportional to the risk taken : Berani mengambil resiko yang diperhitungkan merupakan kunci awal dalam dunia usaha, karena hasil yang akan dicapai akan proporsional terhadap resiko yang akan diambil. Sebuah resiko yang diperhitungkan dengan baik-baik akan lebih banyak memberikan kemungkinan berhasil. Dan inilah faktor penentu yang membedakan “entrepreneur” dengan “manager”. Entrepreneur akan lebih dibutuhkan pada tahap awal pengembangan perusahaan, dan manager dibutuhkan akan mengatur perusahaan yang telah maju.

5. SEEK ADVICE, BUT FOLLOW YOUR BELIEF

Carilah nasehat dari pakarnya, tapi ikuti kata-kata kita. Consult Consultants, ask the experts, but follow your hearts. Entrepreneur selalu mencari nasehat dari berbagai pihak tapi keputusan akhir selalu ada ditangannya dan dapat diputuskan dengan indera ke enam-nya. Komunikasi yang baik dan kepiawaian menjual. Pada fase awal sebuah usaha, kepiawaian menjual merupakan kunci suksesnya. Dan kemampuan untuk memahami dan menguasai hubungan dengan pelanggan akan membantu mengembangkan usaha pada fase itu.

6. WORK HARD, 7 DAY A WEEK, 18 HOURS A DAY

Kerja keras. Etos kerja keras sering dianggap sebagai mimpi kuno dan seharusnya diganti, tapi hard-work and smart-work tidaklah dapat dipisahkan lagi sekarang. Hampir semua successful start-up butuh workaholics. Entrepreneur sejati tidak pernah lepas dari kerjanya, pada saat tidurpun otaknya bekerja dan berpikir akan bussinessnya. Melamunkan dan memimpikan kerjanya.

7. MAKE FRIENDS AS MUCH AS POSSIBLE

Bertemanlah sebanyak banyaknya. Pada harga dan kwalitas yang sama orang membeli dari temannya, pada harga yang sedikit mahal, orang akan tetap membeli dari teman. Teman akan membantu mengembangkan usaha kita, memberi nasehat, membantu menolong pada masa sulit.

8. DEAL WITH FAILURES

Hadapi kegagalan. Kegagalan merupakan sebuah vitamin untuk menguatkan dan mempertajam intuisi dan kemampuan kita berwirausaha, selama kegagalan itu tidak “mematikan”. Setiap usaha selalu akan mempunyai resiko kegagalan dan bila mana itu sampai terjadi, bersiaplah dan hadapilah !

9. JUST DO IT, NOW!

Lakukanlah sekarang juga. Bila anda telah siap, lakukanlah sekarang juga. Manager selalu melakukan READY-AIM-SHOOT, tetapi entrepreneur sejati akan melakukan READY-SHOOT-AIM ! Putuskan dan kerjakan sekarang, karena besok bukanlah milik kita.

How to Manage Your Team in a Downturn (and Come Out on Top)

by Lindsay Blakely

Tags: Team, Employee, Team Management, Management, Recession, Economy, Downturn, Zappos.com Inc., Best Buy Co. Inc., Yahoo! Inc., Lindsay Blakely, Crash Course

Layoffs have truncated staff; cost-cutting measures are threatening projects, and morale is in the toilet. From the manager’s perspective, getting the most out of employees in this kind of environment can seem like a Sisyphean task. In fact, it’s a perfect opportunity to rejigger processes and fix what’s broken — and managers are uniquely positioned to do just that. Here’s how being candid with your employees, rewarding them in creative ways, and enlisting them to help make hard decisions can not only keep your team motivated but pull your company out of its slump.

Step 1 Set the Tone

Goal: Lower the anxiety level in the office by being candid about the challenges — and opportunities — ahead.

It’s easy to blame the economy for all the reasons a company is suffering: Customers are cutting back on their expenses, advertisers are trimming their budgets, and stock prices are sliding. These problems may, in fact, be attributable in part to the downturn, but going with the “It’s the economy, stupid” defense sends a subtle but potentially dangerous message to employees: It implies that the situation is totally out of the company's hands and left in large part to fate. This is exactly the kind of attitude that raises anxiety levels in the office and disrupts employees’ focus on the problem at hand: turning business around.

“Have the confidence to not completely blame the economy,” says Stanford business professor Bob Sutton. “If employees believe that leadership can break things, they’ll believe that leadership can fix things, too.”

Don’t just rely on the CEO’s message. An e-mail from the top explaining why the company is in the red can’t tell employees much, which means mid-level managers need to be the interpreters. Speak to employees in small groups and be as candid as possible about where the company stands. This is also a good time to suss out any rumors. “Organize quick events to ask what people have heard and to answer any questions they have,” says Dave Logan, a senior partner at Los Angeles-based consulting firm Culture Sync.

Open the books. Giving employees the numbers behind company performance clarifies where the business needs to change and how their jobs connect to the bigger picture. But be warned: “If you’re going to be transparent, take the necessary time to teach employees about how the business works,” says Rich Armstrong, general manager of the Great Game of Business, a coaching firm that teaches open-book management. He advises managers to start with what employees probably already understand, like operational numbers, and then connect the dots with how those numbers increase gross margin and generate cash flow. Above all, keep finance jargon to a minimum.

Focus on the future. There’s no need to sugarcoat it: Pulling the company through the downturn isn’t going to be easy, but emphasizing the challenge can have its benefits. “It’s a great time for [your employees] to realize that they can play a role in discovering opportunities for the company,” says Vince Thompson, a former manager at AOL and author of the book Ignited.

Step 2 Enlist the Team to Fix What’s Broken

Goal: Motivate employees and find out how and where the business needs to change.

Traditionally, the top execs decide the strategy and let it trickle down. The problem with this tactic is that it rarely makes the emotional case needed to mobilize employees around a common goal, says Paul Bromfield, a principal at Katzenbach Partners, which has advised companies like Aetna, Credit Suisse, and Pfizer. “This is about problem-solving and discipline, and that’s where employees come in,” he says. “Companies should be harnessing employees in the effort to identify where to cut costs and how.”

Not only will utilizing workers’ expertise make them more invested in the company’s success, it also gives management a more honest look at what’s not working. Senior leadership tends to focus on just one area of cost-cutting, Bromfield says, like products, headcount, or moving operations off-shore. Employees, on the other hand, can use their collective wisdom to eliminate clumsy (and costly) procedures across divisions.

Here are four guidelines for involving staff in the process:

1. Identify key influencers. “If you’re really going to mobilize people, you can’t do it from the top,” Bromfield says. Find the key employees who hold sway in their departments and get them to embrace and spread the change effort. These are the people who know how things really work (not just the way they’re supposed to work) and have a way of bringing together the right people to get things done.

2. Let teams do the problem solving. Form groups around the influencers and motivate (rather than mandate) employees to identify what’s slowing down business. Often the best place to start is to look for processes and bureaucracies that annoy the team. Set a basic timeframe to achieve cost savings, but let each group work at its own pace.

3. Make it a conversation. Schedule brown-bag lunches or other informal venues to talk to employees about their findings and where they might be hitting roadblocks. In the early 1990s, Bromfield’s former client Texas Commerce Bank held focus groups with thousands of its employees to find out what procedures most frustrated bankers and customers. Using the feedback, the company nearly doubled its $50 million cost-savings goal.

4. Follow through. Many cost-savings programs fail because management implements the initiative only halfway or lets inefficiencies creep back after meeting short-term goals, which won’t sit well with employees. Adopt the changes wholesale or not at all.

Step 3.Get Back to the Work That Matters

Goal: Make sure your team is tuned in to growth opportunities.

The problem with a downturn is that while cost cutting is absolutely necessary, it can make everyone gun-shy about pursuing new initiatives and opportunities for investment. However, if your department, and in turn the company, is going to emerge from the slump in a competitive position, there are a few key investments you can’t afford not to fight for now:

Customers

Learn about the customers of your weakest competitors, writes Michael Roberto, a blogger for Harvard Business Publishing and management professor at Bryant University. While competitors are busy shoring up their relationships with large, established clients, it could be the perfect time to swoop in and court their smaller customers.

Research and Development

Take a cue from Apple’s Steve Jobs. When asked by Fortune magazine recently about Apple’s strategy for the downturn, Jobs pointed to how the company survived the 2001 tech bust by upping its R&D budget. “It worked, and that’s exactly what we’ll do this time,” he told the magazine.

Separate the value-added activities from the wheel-spinning exercises, Thompson suggests in Ignited. Instead of giving up on new projects in a downturn, shift focus so that the team is investing time in identifying and prioritizing the projects that will generate the most benefit for the company. Even if the final product will have to wait until more resources are available, doing the legwork now means the product will go to market faster when the time is right — and employees will stay engaged in the meantime.

Vendors/Partners

“There are two ways to run a business,” says Fred Mossler, senior vice president of merchandising for online shoe retailer Zappos, “adversarily or as a partnership.” Considering that the company relies on about 1,500 partners to provide its customers with a diverse selection of shoes, Zappos has chosen the latter option. To that end, the company built an extranet, so that every partner can see how its brand is performing. “They get to see everything our buyers see,” Mossler says. “This way we have about 1,500 other sets of eyes looking at our business and helping to improve it.”

Step 4 Acknowledge and Reward Deserving Employees

Goal: Recognize achievement, even if resources are scarce.

Employee bonuses and raises are among some of the first expenses that upper management cuts during a downturn. But even if extra compensation isn’t in the budget, that doesn’t excuse managers from rewarding employees. “Lack of recognition — both financially and verbally — is one of the things that does the most damage,” says David Sirota, founder of the management-consulting firm Sirota Survey Intelligence. “I worked with an investment bank some years back where bankers were earning bonuses from $100,000 to $1 million a year,” he says. “You know what they complained about? They didn’t know if the chairman thought they were actually doing a good job, because he never spoke to them about it.”

BNET Video: Giving Effective Praise.

One easy, no-cost way of recognizing valuable employees is to improve their quality of life. “The best reward you can give people is autonomy over how they spend their time,” says Jody Thompson, a former Best Buy human resources manager who, along with Cali Ressler, helped create the company’s Results-Only Work Environment program. That means giving employees your trust and the flexibility to work at home (or wherever suits them) whenever they want to — without any judgments. This gives workers more control over their time, and sometimes even a little extra cash. Sun Microsystems has found that employees who worked an average of 2.5 days at home each week saved $1,700 a year in gas and vehicle wear-and-tear.

http://www.bnet.com/2403-13059_23-208896.html

Has the recession put your organization in a choke hold? Here’s how to survive — even thrive — in the face of budget cuts, layoffs, and sub-zero moral

Beyond the balance sheet, there’s another way to tell that recession has set in — and it might be even more disconcerting than the numbers. We’re talking about what happens to otherwise compelling and rewarding work when a serious economic slump hits inside a company. That great job you landed a year ago starts to feel a little ... crummier each day, as you’re asked to do more with less, demand more of your people, and keep your own aspirations and integrity intact.

Our feature package helps managers understand what happens inside an organization during tough times, and how to triumph in the face of downright crummy conditions.

http://www.bnet.com/2436-13059_23-208901.html

Leadership in the 21st century: the effect of emotional intelligence

Academy of Strategic Management Journal, Annual, 2006 by Victor Pinos, Nicholas W. Twigg, Satyanarayana Parayitam, Bradley J. Olson

ABSTRACT

We developed a model in which transformational leadership mediated between emotional intelligence and workplace performance. This paper states the effect of emotional intelligence on transformational leadership style in the 21st century. It is proposed that the emotional intelligence concepts of self-awareness, self-management, social awareness, and relationship management contribute to enhance a leader's sense of self and others in order to accomplish organization's goals. Transformational leadership characteristics are also reviewed to understand how leaders can aim their efforts towards specific objectives. Moreover, a leaders and managers' overview in the current millennium is also included in this paper to obtain links between transformational leadership and emotional intelligence. A discussion of research issues and future direction is also reviewed for new analyses, as well as conclusions.

INTRODUCTION

The purpose of this paper is to propose relationships between emotional intelligence and transformational leadership. In the current millennium, companies need leaders who are able to operate in multicultural environments, are aware of global marketing issues, and recognize the need for diversity because these will allow organizations to remain competitive and survive in multicultural environments (Pool & Cotton, 2004). Leaders around the world need to consider personal, social, business, and cultural aspects of global literacy (Rosen & Digh, 2001) as well as social literacy issues such as, trust, listening, constructive impatience, connective teaching, and collaborative individualism (Pool & Cotton, 2004). In addition, Rosen and Digh (2001) state that business literacy must include, among other skills, the ability to create leaders, manage difficult situations, and be a real link between leaders and followers. In short, global literacy and social literacy relate to emotional intelligence through motivation, adeptness in relationships, and self regulation of emotions.

Burns (1978) first proposed that transformational leaders demonstrate high levels of moral conduct, ethical conduct, self-sacrifice, determination, and far-sightedness. Transformational leadership behaviors consist of four dimensions: idealized influence (TLii), individualized consideration (TLic), inspirational motivation (TLim), and intellectual stimulation (TLis). Transformational leaders give individualized consideration through developing and mentoring followers (Bass & Avolio, 1994). They provide inspirational motivation (TLim) by giving meaning to work, encouraging pro-social behavior, and emphasizing social goals instead of individual goals. They also promote intellectual stimulation (TLis) by encouraging innovation and creativity in approaching old situations in new ways. Transformational leadership is based on the perception of subordinates, therefore the more that subordinates feel that the leader is a transformational type, the more that the leader's vision is ingrained in followers. Emotional intelligence plays a crucial role here. Leaders with high EI help organizations create and maintain competitive advantage through increased performance, enhanced innovation, effective use of time and resources, restored trust, teamwork, and motivation (Goleman, 2000) Transformational leadership theory provides a model where leaders can develop their skills to coach, mentor, and facilitate in the workplace in addition to the traditional leadership functions of planning, directing, organizing, and controlling.

Emotional intelligence (EI) is defined as one's ability to manage and monitor one's own emotions; recognize different types of emotions in others; distinguish the difference between one's emotions and those of others; and possess the ability to direct information towards one's decision making actions (Mayer & Salovey, 1993). In fact, EI has been identified as a real measure for distinguishing superior leadership skills and abilities (Pool & Cotton, 2004), and in recent years has become an important topic in social and organizational science (Fineman, 1993; Mayer & Salovey, 1997). Moreover, the influence of emotional intelligence on popular culture and the academic community has been rapidly growing (Emmerling & Goleman, 2003). Therefore, the study of EI has stimulated a great number of research initiatives under a wide range of psychological patterns that have created a gap between what we know and what we need to know (Emmerling & Goleman, 2003). In the same way, emotional intelligence has caught the attention of business leaders and scholars (Goleman, Boyatzis, and McKee, 2002); and its concepts are within an area of interest for executive development consultants (Connor & Mackenzie-Smith, 2003). While technical skills and core competencies are essential for sustainable competitive advantage, the ability to outperform other organizations largely depends on how employees manage their relationships with others. In other words, emotional intelligence helps an organization commit to a basic strategy, build relationships inside and outside that offer competitive advantage, promote innovation and risk taking, provide a platform to shared learning, maintain balance between the human and financial side of the company's agenda, and develop open communication and trust-building among employees and leaders. Research suggests that leaders possessing EI create a work climate that further develops EI at the subordinate level (Yammarino & Atwater, 1997). Although some researchers point out that EI helps in building a successful organization, to date very little has been done to explain the mechanism through which EI increases work-place effectiveness. More precisely, EI is proposed as an antecedent of transformational leadership behaviors. EI enhances workplace performance by enhancing a leader's transformational leadership behaviors.

http://findarticles.com/p/articles/mi_m1TOK/is_5/ai_n25009480?tag=content;col1

Strategic human resources as a strategic weapon for enhancing labor productivity: empirical evidence

Academy of Strategic Management Journal, Annual, 2006 by Morsheda Hassan, Abdalla Hagen, Ivan Daigs

ABSTRACT

This pioneer study investigates strategic human resource management practices (employment security, selective hiring, self-managed teams and decentralization, comparatively high compensation contingent on organizational performance, extensive training and development programs, reduction of status differences, and sharing information) that treat a firm's human resources as valuable assets. Subsequently, this study investigates the relationship between these human resources management practices and a firm's labor productivity. The results of this study revealed a positive and significant relationship between five strategic human resources management practices (job security, selective hiring, self-managed teams and decentralization, extensive training and development programs, and comparatively high compensation contingent on organizational performance) and the company's labor productivity. While reduction of status differences has positive and insignificant relationship with the company's labor productivity, sharing information has a positive and marginal relationship with the company's labor productivity.

INTRODUCTION

Over the past decade, several studies (e.g., Cascio, 1991; Arthur, 1994; Huselid, 1995; Delery & Doty, 1996; Pfeffer, 1998; Hagen, Udeh, & Hassan, 2001; Bahattacharya & Doty, 2005) conducted within and across many industries demonstrate that enormous economic returns were obtained through the implementation of high commitment management practices. Furthermore, much of this research serves to validate earlier writing on participative management and employee involvement. Despite these research results, trends in actual management practice are, in many instances, moving in a direction opposite to what this growing body of evidence prescribes. Moreover, this disjuncture between knowledge and management practice is occurring at the same time that organizations, confronted with a very competitive environment, are looking for some magic solutions that will provide sustained success, at least over some reasonable period of time (Pfeffer, 1998; Lepak & Snell, 200; Koyes, 2001; Zollo & Winter, 2002).

Rather than putting their human resources first (Miller & Lee, 2001), many organizations have sought means to competitive challenges in places that have not been very productive. Such organizations treat their businesses as portfolios of assets to be bought and sold in an effort to find the right competitive niche, downsizing and outsourcing in a risky attempt to shrink or transact their way to profit, and doing other things that weaken or destroy their organizational culture in order to minimize labor costs (Pfeffer & Veiga, 1999). This pioneer study claims that the way an organization manages its human resources is a real and enduring source of competitive advantage. To support this claim, this study examines the relationship between the suggested strategic human resource management practices and labor productivity.

CORROBORATIVE EVIDENCE

CEOs frequently say, "Don't just give me anecdotes specifically selected to make some point; show me the evidence!" Fortunately, there is a substantial and rapidly expanding body of evidence that speaks to the strong connection between how firms manage their human resources and the economic results achieved. This evidence is drawn from studies of 5-year survival rates of initial public offerings; studies of profitability and stock price in large samples of companies from multiple industries; and detailed research on the automobile, apparel, semiconductor, steel manufacturing, oil refining, and service industries. It shows that substantial gains can be obtained by implementing high performance management practices (Pfeffer, 1998; Ellinger et al., 2002).

According to an award-winning study of high performance work practices of 968 firms representing all major industries, a one standard deviation increase in the use of such practices is associated with a 7.05 percent decrease in turnover and, on a per employee basis, $27,044 more in sales and $18,641 and $3,814 more in market value and profits, respectively (Huselid, 1995). That is an $18,000 increase in stock market value per employee. A subsequent study conducted on 702 firms in 1996 found even larger economic benefits: A one standard deviation improvement in the human resources system was associated with an increase in shareholder wealth of $41,000 per employee, about a 14 percent market value premium (Huselid & Becker, 1997). These results are not unique to firms operating in the United States. Similar results were obtained in a study of more than one hundred German companies operating in ten industrial sectors. The study found a strong link between investing in employees and stock market performance. Companies place workers at the core of their strategies produce higher long-term returns to shareholders than their peers (Bilmes, Wetzker, & Xhonneux, 1997).

One of the clearest demonstrations of the causal effect of management practices on performance comes from a study of five-year survival rate of 136 non-financial companies that initiated their public offering in the U.S. stock market in 1988. By 1993, only 60 percent of these companies were still in existence. The empirical analysis demonstrated that with other factors such as the company's size, industry, and even profits statistically controlled, both the value that a company placed on human resources (such as whether the company cited employees as a source of competitive advantage) and how the company rewarded people (such as stock options for all employees and profit sharing) were significantly related to the probability of survival. Moreover, the results were substantively important. The difference in survival probability for firms is one standard deviation above and one standard deviation below the mean (in the upper 16 percent and the lower 16 percent of all firms in the sample) on valuing human resource was almost 20 percent. The difference in survival, depending on where the firm scored on rewards, was even more dramatic, with a difference in five-year survival probability of 42 percent between firms in the upper and lower tails of the distribution (Welbourne & Andrews, 1996).

http://findarticles.com/p/articles/mi_m1TOK/is_5/ai_n25009481?tag=content;col1

Edwards Deming, Mary P. Follett and Frederick W. Taylor: reconciliation of differences in organizational and strategic leadership

Academy of Strategic Management Journal, Annual, 2007 by Lonnie D. Phelps, Satyanarayana Parayitam, Bradley J. Olson

ABSTRACT

Much has been written and researched about Deming's 'total quality management' (TQM), Follett's 'law of situation', and Taylor's 'scientific management'. Yet, these management scholars differ in their organizational and strategic leadership abilities and practices and remained in three different corners of a triangle. Though the differences in their thinking may be attributed to the changing nature of management as a discipline over a period of time and consequent changes in the fractionalized corporate ownership, there are some interesting commonalities found in their approaches. The purpose of this paper is to highlight some of the commonalities between total quality and scientific management, and explain how Follett's law of situation bridges the gap between these seemingly different approaches. The commonalities found in Taylor, Follett and Deming provide enduring lessons for the practitioners and academicians, and enrich the organizational and strategic leadership literature.

INTRODUCTION

A review of the scientific management theory of Taylor, total quality management perspective of Deming, and systems thinking of Follett gives an impression that these scholars differ dramatically in their approaches apples to oranges (and grapes). However, by turning to the original works of Taylor, Deming and Follett (rather than others' interpretations) one may opine that Taylor's ideas have reemerged in the form of Deming's quality management and Follett's systems thinking paved a bridge between these perceived polar theories. This paper is divided into four sections. The first section gives a brief description of Deming's total quality management (TQM); the second compares the scientific management principles of Taylor with TQM; and the third section compares Follett's theory with Deming's. In the final section we synthesize these approaches, contrary to the conventional wisdom, and conclude that these theories have more in common than it would seem.

DEMING'S TOTAL QUALITY MANAGEMENT

Deming, with a doctorate in mathematical physics from Yale and a nomination for the Nobel Prize in 1992, was an extraordinary and remarkable individual. In fact, Deming was an institution in himself (he passed away in December 1993 at the age of 93 years), and an astute businessman who brought Japan back from the ashes of the World War II. In his time, Deming was the most powerful management consultant anywhere in the world, and a friend-consultant-advisor who made the Japanese post-second world war miracle possible (Stupak, 1999). Unsurprisingly, the emphasis on 'quality' placed the Japanese companies on the Fortune list. Having acted as a savior of Japan for three decades, Deming was invited by US business houses to make recommendations for retaining competitive strength and ensuring corporate survival. Deming pointed out seven deadly sins that plagued American businesses and suggested fourteen remedies in his outstanding book, "Out of Crisis", published in 1986. By the 1990's, American companies unquestionably started implementing the magic 'quality pill' as advocated by Deming in order to come 'out of crisis'. The deadly sins and Deming's 14 points are summarized in Table 1.

Several scholars have documented the importance of Deming's legacy in the development of what is commonly known as Total Quality Management (TQM), although Deming himself never used the term TQM (Vinzant & Vinzant, 1999). According to Deming, "Western style of management must change to halt the decline of Western industry, and to turn it upward. There must be awakening to the crisis, followed by action--management's job. The transformation can only be accomplished by man, not by hardware (computers, gadgets, automation, and new machinery). A company cannot buy its way into quality" (Deming, 1986: 18). Deming suggested a total transformation through four major themes, which refers to the system of 'profound knowledge'. The themes are:

a. appreciation of the system (i.e. interdependence of all the organizational units that work to accomplish the goals in an organization)

b. knowledge of variation (i.e. understanding what variables can reveal about the capabilities of the system)

c. understanding of the theory of knowledge

d. psychology (i.e. intrinsic motivation)

Deming's theory of knowledge is derived from the work of Lewis (1929), who taught that knowledge is built on theory, observation of the past, and predictions about future outcomes. Deming contends that rational prediction requires theory and builds knowledge through systematic revision based on the comparison of actual outcome with the predicted one. Deming asserts that "information, no matter how complete and speedy, is not knowledge. Knowledge has temporal speed. Without theory, there is no way to use the information that comes to us on the instant" (Deming, 1993: 104-105). In addition, Deming contends that the system of profound knowledge as outlined in the four major themes will enable managers to make the transformation necessary for survival and success in volatile economic climates.

http://findarticles.com/p/articles/mi_m1TOK/is_6/ai_n25009525?tag=artBody;col1

Leading a postmodern workforce

Academy of Strategic Management Journal, Annual, 2007 by Daryl D. Green

ABSTRACT

This paper explores contemporary leadership theory within a postmodernism society in the public sector. The paper investigates leadership theory by comparing and contrasting bureaucratic theory, transactional leadership theory, and transformational leadership theory in the ever changing workforce of federal employees. The study is significant because there are government-wide human capital problems, and this is highly relevant to anyone who must lead in the public sector. The paper concludes with a set of five strategic implications for researchers and practitioners. This effort contributes to further exploration into understanding leadership and organizational culture in the public sector.

INTRODUCTION

With sixty percent (60%) of the government's 1.6 million employees eligible for retirement, the federal government finds itself in a hostile environment. The changes in workforce demographics will create leadership challenges in the future as Baby Boomer employees make their massive exodus from the workforce. For complementary leaders, there is a caution sign that reads, "Proceed cautiously, danger ahead." Currently, the government has declared its human capital practices as a "high risk" area of concern (Blunt, 2003). Linda Springer, the Office of Personnel Management (OPM) Director, calls this issue a retirement tsunami and feels managers need to start taking this cultural shift seriously (Ziegler, 2006). In the past, corporate culture has been able to stabilize such influences; corporate culture gives employees a blueprint for understanding organizational values and beliefs. What happens to an organization when the leader's values are no longer aligned to the belief system of the employees? Reacting to changing cultural influences and global threats abroad, the federal government finds itself in a major transformation process (Blunt, 2003). These situations are made more complicated due to the massive exodus of its leaders. The leadership training for senior executives has been sparse and inadequate in relationship to these culture changes.

The purpose of this article is to provide an exploratory insight related to leadership theory and its application in the postmodern era. This paper examines several aspects of leadership theory consisting of bureaucratic theory, transactional leadership theory, and transformational leadership theory in the public sector. The primary objective is to identify the current values attributed to contemporary leadership and compare varying leadership theories in the postmodern period. The following discussion will be investigated: (a) the current organizational changes, (b) the postmodern culture and its impact upon the workforce, and (c) understanding leadership theory in the postmodern period. These issues are significant because of the potential conflicts that can exist between leaders and employees in organizations.

CONTEMPORARY LEADERSHIP THEORY

Leadership Theory provides researchers an opportunity to understand leader-follower relationships in a cultural framework. Prewitt (2004) noted that the current leadership theories are based on modernist assumptions and are out of date with leading postmodern organizations. Schmidt (2006) argued that leadership definitions reflect the viewpoint of an industrial society, and a new era begat a new definition for leadership. Nevertheless, this paper defines leadership as a contextual influence that has an impact on subordinates' attitudes and performance through effects on the subordinates' perceptions of their job characteristics (Northouse, 2004). Therefore, leaders have the capacity to influence the values needed in a changing organizational environment (Ferguson, 2003).

POSTMODERN CULTURE

Postmodernism is a philosophical term with a cultural context. Modernism places man at the center of reality by utilizing science to explain the meaning of life. In contrast, postmodernism places no one at the center of reality and has no core explanation of life (Kelm, 1999). Ingraffia (1995) figuratively described modernism as an attempt to elevate man into God's place while postmodernism seeks to destroy the very place and attributes of God. Some of the key themes of postmodernism include (a) Pluralism, which means the denial of any one universal truth; (b) Non-objectivism, which conveys that all facts are not hard facts and science has limited application; (c) Deconstruction, which teaches that meaning is through the interpreter rather than the text or object interpreted; (d) Cynicism/pessimism, which promotes the absence of absolute truth, no universal purpose in life, and no possibility of arriving at certain knowledge of anything; and (e) Community, which advocates meaning and understanding determined through a tribal or community setting (Kelm, 1999). Therefore, postmodernism provides a conceptual threat to traditional organizations.

METHODOLOGY

This investigation provides exploratory data by utilizing an extensive literary review of over 20 documents including scholarly opinions and practitioner discussions. The contributions made by well-known researchers in the fields of postmodernism and leadership theory, such as Bass and Yukl, were investigated. The primary objective of this review of literature is to increase depth of knowledge in this field in order to make a relevant analysis of each theory. Electronic databases such as EBSCO Host and the Internet were searched using key words 'leadership theories,' bureaucracy,' 'transactional leadership,' 'transformational leadership,' 'organizational values,' 'corporate culture,' and 'postmodernism.' There was a significant absence of literature related to leadership theories as it relates to postmodernism. Through this process, there is an opportunity to discover the gaps in research.

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The strategic implications of technology on job loss

ABSTRACT

This paper investigates the impact of technology on job loss (both slowed growth rates and actual declines) across the economy (both manufacturing and service segments) and reflects on the strategic implications of that activity for firms and individuals. It argues that the technology-enabled economy will continue to expand and produce an increasing potential for further job losses or reallocation across all economic sectors. Firms able to create or adopt strategies for coping with the implications of technology in their respective industries may be able to convert a potentially difficult situation into an opportunity. Finally, this paper begins to investigate the question: how will (or can) the economy provide continued or future employment to displaced workers or alternatively give them and their firms some practical strategic coping mechanisms?

INTRODUCTION

Much has been written about the loss of jobs from first-world developed counties (i.e.: United States, Japan, Western Europe) to third-world developing countries (i.e.: Mexico, China, India). The focus often has been on manufacturing jobs simply because jobs lost in that sector provide politicians and labor leaders alike with opportunistic sound bites. However, many economists argue that the total drop in factory employment (in one country) is not due largely to foreign displacement (to another country). The loss of factory jobs is happening all over the world. From Drezner (2004), during the seven-year period 1995 to 2002, 22 million global factory jobs disappeared--not due to offshoring but due to increased productivity (which, even in the face of those lost factory jobs, resulted in a 30 percent increase in global industrial output since 1995). The implication, to both individuals and firms, of protracted job losses and/or reallocations is a topic of considerable importance and concern to anyone with an interest in the future. A generalized examination of options for firms and individuals faced with the changing conditions brought about by technology is a crucial staring point for determining how best to respond at both levels. This paper is a preliminary effort intended to consolidate many of the observations and information related to technology generated job losses with some initial suggestions on mediating their effect.

Substitute "advances in technology" for "increased productivity" and the underlying shift from a labor-intensive to a technology-enabled economy can be explained. This shift not only explains the significant loss in global factory jobs, but the off-shoring effect seen, for example, in the movement of customer service call centers from the U.S. to India. Still, the shift of technology-enabled jobs from one country to another (whether they are manufacturing or service) is not a loss of jobs within the global economy. Economic arguments abound that such shifts are not only necessary but desirable since they lead to overall economic improvements. Of greater concern is the permanent loss of jobs (or those jobs never created) because of the increased use of technology.

Business Week estimates that every one percent of annual productivity growth allows U.S. corporations to eliminate about 1.3 million jobs. Productivity in the U.S. has grown almost two percent since 2001; that accounts for almost all of the 2.5 million jobs lost in the past three years. Many argue that the best remedy is for the government to help those workers find new employment, rather than trying to stop the jobs from being destroyed in the first place. So, as the argument goes, the loss of manufacturing jobs is not of major concern--just as the agriculture economy was transformed by the manufacturing economy, the manufacturing economy, in turn, will be transformed by the service economy. They might be different jobs, and some workers might suffer from the displacement effects, but the necessary jobs will be created none-the-less.

Agrawal and Farrell (2003), noting the aging U.S. population, suggests that the U.S. will need 15.6 million more workers by 2015 to maintain both current living standards and the current ratio of workers to the total population. But, where will those jobs come from? What happens when the simultaneous impact of automation, mechanization, and computerization not only continues to eliminate manufacturing jobs worldwide (between 1995 and 2002 the U.S. lost 11%, Japan lost 16%, Brazil lost 20%, and China lost 15% of its manufacturing job base) but also begins to eliminate service jobs at an increasing rate?

THE PATH TO JOB DISSOLUTION

The U.S. economy is down about 2 million jobs since 2001, despite a government report of 308,000 jobs added in March, 2004. In an economy that by most measures--from soaring corporate profits to rapid growth in output--is in high gear, the lack of significant job growth may seem puzzling but only because the underlying reason often is not identified. Outsourcing, whether offshore or locally, plays a role; however, a major factor is the use of technology, which has allowed employers to increase productivity with fewer workers.

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The influences of the chief executive officer's stock and option ownership on firm risk taking: an examination of resource allocation choices

ABSTRACT

We examine the influences of the chief executive officer's (CEO's) stock and option ownership on firm risk taking, proxied by resource allocations to research and development (R&D), discretionary funds, and advertising. We contend that at low to moderate values of managerial stock ownership, risk-increasing decisions may predominate. At substantial executive equity values, however, we suggest that risk-reducing decisions may be motivated. In contrast, our contention is that CEO option holding values are monotonically and directly associated with corporate risk taking. Additionally, we expect the joint effects of stock and options on firm risk may be different from their individual effects. The empirical findings are supportive of our contentions.

INTRODUCTION

Researchers have studied the influences on firm outcomes of ownership stakes. The implication of the related studies has often been that the effect on corporate outcomes of common stock is similar to options (e.g., Joseph & Richardson, 2002; Mehran, 1995; Shleifer & Vishny, 1997; Wright, Ferris, Sarin, & Awasthi, 1996). The influence of stock ownership, however, may be different from that of option holdings. That is because common stock ownership confronts executives with both downside and upside share price movements whereas option holdings ordinarily expose managers to solely upside price movements. Hence, options only expose managers to the upside outcome potential, whereas stock ownership exposes managers to both upside and downside outcome potentials.

Our contention is that the influence of common stock and option ownership on corporate risk taking may be similar or different, not only individually, but also in combination. We suggest that at low to moderate values of common stock ownership in the firms they manage, the effect of executive equity stakes is similar to options. Contrarily, we argue that at substantial values of stock ownership, managers may become overinvested in the firm and predisposed to negatively influence firm risk. In this setting, consequently, the impact of common stock may be opposite to that of option ownership. Additionally, where examined in combination, we find that options may nullify the negative influence of stock ownership on firm risk at substantial values of executive stock ownership.

The notion that executive equity ownership may have non-linear associations with corporate outcomes, however, has been recognized in prior studies. For example, Stulz (1988) and Shivdasani (1993) argued that the relationship of ownership structure of target firms with the value of takeover bids may initially be positive and then subsequently become negative with rising insider ownership stakes. McConnell and Servaes (1990) as well as Morck, Shleifer, and Vishny (1988) demonstrated a non-monotonic relation between firm value and ownership stakes of board members. Joseph and Richardson (2002) showed a non-monotonic association between ownership incentives of board members and resource allocation to advertising. Also relevant to our work, Wright, Ferris, Sarin, and Awasthi (1996) reported a non-linear association between executive ownership and firm risk, using the dispersion of earnings forecasts.

Our contributions in this study, however, differ from those made in the prior literature. Specifically, we focus on values of equity ownership (in isolation of option ownership) and executive preferences for changes in corporate risk as motives for select resources allocation decisions. Where managerial ownership stake values in the enterprise are low to moderate, we suggest that risk-increasing decisions may prevail since with such decisions the value of executive equity stakes may increase (Agrawal & Mandelker, 1987; Chang, 2003; Wruck, 1994; Wright, Kroll, Krug, & Pettus, 2007). In contrast, with substantial values of common stock in their enterprises, we expect that executives may prefer risk-reducing corporate strategies since they might perceive that such strategies could protect their private interests.

Additionally, in this study we examine the influence of option holdings (in isolation of shareholdings) on executive decisions that entail corporate risk taking, proxied by resource allocations. Executives who are granted stock options benefit as stock prices rise. If the value of the firm's stock goes down, however, executives are not confronted with a reduction in their wealth. In this situation, they will not exercise their options. With firm risk taking, consequently, managers may benefit as firm and option values increase but they will not experience wealth loss if corporate and option values decrease. Finally, in this work we analyze the joint impacts of managerial common stock and option ownership on firm risk, proxied by resource allocations. In some circumstances, our study indicates that the joint effects on corporate resource allocations of ownership incentives are similar to their individual effects but not in other circumstances. We further detail our contributions in the upcoming sections of the paper.

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End-user computing strategy: an examination of its impact on end-user satisfaction

ABSTRACT

Organizational attitudes and expectations regarding end-user computing (EUC) have changed radically in the past 25 years and have researchers describing end-user computing as a vital component of the overall information resource in the organization. Throughout this period of unprecedented growth from limited desktop computing to near-saturation desktop and mobile EUC, companies have struggled to formulate appropriate EUC strategy and researchers have suggested that the development of an effective EUC strategy "may be the most important short-term decision the organization can make if it hopes to benefit from its investments in end-user-based technologies" (Alavi, M., Nelson, R. R., and Weiss, I. R., 1987-88, p. 29). Using the EUC Strategy Grid proposed by Munro, Huff, and Moore (1987-88), this research explores the issue of EUC management by examining (1) the relationship between EUC strategy and end-user satisfaction, and (2) the influence of end-user satisfaction with organizational satisfaction. The results indicate that organizations can increase the level of satisfaction of employees engaged in EUC activities by adopting an EUC strategy high in expansion tactics and that the level of dissatisfaction experienced by higher-level end-users can be decreased by avoiding or modifying the containment EUC strategy, characterized by high control and low expansion. Additionally, the EUC strategy can be expected to have a positive influence on user behavior.

INTRODUCTION

Organizational attitudes and expectations regarding end-user computing (EUC) have changed radically in the past 25 years. Initially, EUC was perceived as a departmental-level management issue for MIS. From 1982 until 1991, MIS managers consistently ranked "the facilitation and management of end-user computing" in their lists of top twenty issues (Ball and Harris, 1982; Dickson, G. W., Leitheiser, R. L., Wetherbe, J. C., and Nechis, M., 1984; Brancheau and Wetherbe, 1987; Niederman, F., Brancheau, J. C., and Wetherbe, J. C., 1991). During that same period, as large numbers of organizations made the transition from centralized mainframe technology to decentralized desktop technology, spending for end-user computing in some organizations increased from between 40% and 50% of the computing resources (Rockart and Flannery, 1983) to between 60% and 80% of the IT budget (Amoroso and Cheney, 1991). In less than 10 years, however, EUC had spread so broadly throughout most organizations that it could no longer be considered a management issue solely for MIS managers (Reed, 1989). In 1992, research by Harrison and Rainer confirmed that end-user computing had emerged as a vital component of the overall information resource in the organization. EUC in some organizations was consuming nearly 90% of the computing resources (Amoroso and Cheney, 1992). Increased funding translated to greater numbers of end-users. In a 1994 survey, Nord and Nord found that 98% of those interviewed used a computer in their jobs. Today, end-user computing is part and parcel of the work place; moreover, EUC is now expanding beyond the confines of the office. One writer recently used the term "explosion" to describe the ever growing number of end-users, freed from their desktops by wireless connectivity, engaged in mobile EUC activities (Saran, 2006).

From the beginning, end-user computing has changed the way people worked, improving the collection and organization of data, and allowing them to focus on their basic job responsibilities. At first, early organizational expectations for EUC were primarily to expedite the entry of data into the organization's centralized mainframe system and to facilitate personal productivity by providing mostly word processing and/or spreadsheet application software on the desktop. By 1990, Boyer suggested that the organization had to achieve a better understanding of end-user computing because it presented such important advantages and disadvantages in areas of time, cost, and quality. Today, in their fast-paced, global environment, businesses actively seek employees with increased technical skills and knowledge, and expect these end-users to utilize the technology for the maximum benefit to the organization (Jawahar and Elango, 2001).

Throughout this period of unprecedented growth in end-user computing, from limited desktop computing to near-saturation desktop and mobile EUC, companies have struggled to formulate appropriate EUC strategy. As early as 1983, while studying the status of end-user computing in corporate America, Rockart and Flannery were surprised to find that the organizations participating in their study did not have a strategy for the management of EUC. The authors suggested that organizations would be required to establish appropriate strategies for the development and management of EUC if they were to take advantage of its immense potential. Since that study, other researchers have suggested that the development of an effective EUC strategy "may be the most important short-term decision the organization can make if it hopes to benefit from its investments in end-user-based technologies" (Alavi, M., Nelson, R. R., and Weiss, I. R., 1987-88, p. 29). A study conducted under the auspices of The Institute of Internal Auditors Research Foundation revealed that only 31 percent of the organizations surveyed had developed their end-user computing in a systematic fashion (Rittenberg and Senn, 1993). In a commentary appearing in Computerworld in 1995, de Jager stated that companies had little to show in the way of increased productivity for the billions of dollars being spent annually on computers, and that the fault rested with the management (or lack thereof) of end-user computing. Reminiscent of Rockart and Flannery's (1983) findings, de Jager (1995) found that most businesses still had no formal EUC policies, guidelines, or audit procedures to monitor the productivity of their EUC resource.

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Journey to the north face: a guide to business transformation

ABSTRACT

More Articles of InterestOrganizations increasingly chose to adopt lean enterprise strategies but implementing strategy is a difficult task, prone to failure. Transforming our businesses into a new model, one that removes non-value added activities, requires a three-phase transformation: a cultural transformation, implementing lean tools, and extending lean principles into the value stream outside the business. This paper focuses on the first two aspects of the transformation. In moving an enterprise to lean, leading the change must come from the top but other leaders must also be present. Change leaders at the business unit level, called Transformanagers, and plant level implementers, called "Lean Berets," provide the skills, knowledge, and involvement to implement lean systems throughout the organization. Supporting mechanisms, such as unwavering sponsorship from the top, a clearly articulated vision, and alignment of all employees are other necessary components for successful lean transformations. Organizational structures that support teams, and organizational linkages that cut across functional boundaries must be implemented. Finally, the importance of extensive training and dedicated resources is stressed and a recommended training program is presented. Such a commitment of resources to the training effort recognizes that people are as important as equipment, tools, and processes in implementing a lean transformation strategy.

INTRODUCTION

We live in a world where information has become the dominant value driver, where markets and competition are global, and where rocketing IPO's, mega-mergers, and predatory acquisitions are changing both the business landscape and its clock speed forever. The last fifteen years of unprecedented prosperity have created amazing growth, along with a troubling level of complacency and expectation for its continuance; yet we all know that no tree grows to heaven. Likewise, we know that the management systems we currently use to run our businesses will not be adequate for creating ever-increasing stakeholder value in a declining market. In the face of such challenges, many organizations are adopting a lean enterprise strategy. Yet, implementing a strategy, particularly one that demands major change at all levels of the firm and within its culture, is difficult and prone to failure. For that reason, it is imperative to take a fresh look at how to transform our businesses into the new lean enterprise model

TRANSFORMATION

Business transformation moves an organization from an existing condition to a future state that represents a targeted strategic ideal. The connection between such business transformation and leadership is an important and recurring theme (Burns, 1978; Bass & Avolio, 1993; Bass, 1997). Without effective leadership, business transformation will not succeed and the strategic vision will not come to fruition. In today's tumultuous business climate, organizations often need to work against the competitive clock to transform systems, processes, methodologies, and competencies in order to enjoy brief competitive advantage, or even just to sustain profitability. The transformation we are presenting is not about the evolution of a new business entity (e.g. from hardware to systems solutions), and it differs fundamentally from "kaizen events" or site focused process improvement activities. Rather, the business transformation of concern here is implementing lasting change in the behaviors of an established organization, focusing on the preparation necessary to create the right structure, behavior, and methodologies as the underpinnings of business excellence. The ideal future state of the business transformation under discussion is the lean enterprise.

EXCELLENCE: THE LEAN ENTERPRISE

The lean enterprise embodies lean principles at its heart, that is, its operations are based on a manufacturing philosophy that eliminates activities that add cost but not value and it "reduces the time from customer order to delivery by eliminating sources of waste in the production flow." (Liker, 1997:7) The same principles flow from the operational heart throughout the organization, then upstream to suppliers and downstream to customers, encompassing an entire enterprise. In the words of James Womack and Daniel Jones (1996), the lean enterprise is a "channel for the value stream" from the design of a product or service to customer delivery. The lean enterprise articulates all its activities in answer to the question : What does the customer consider value?

The lean enterprise has two essential characteristics: focus on customers and cooperation (Maskell & Baggaley, 2003). In both, the end focus lies outside the boundaries of the organization, either by focusing on adding value to the customer or by interacting in a cooperative manner with customers, suppliers, and other third parties. Yet, the foundation for the lean enterprise lies in transforming the organization internally first through a cultural transformation and implementing lean tools. This paper focuses on the foundation.

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Strategic comparisons of very large firms to smaller firms in a financial service industry

ABSTRACT

The paper presents an empirical investigation comparing strategic profiles of very large enterprises (VLEs) to small and medium sized firms (SMEs) in the financial services industry, collecting data from a sample of executives at credit unions. In particular, the authors find VLEs to be larger, more structurally integrated, centralized and complex, more market oriented, and to be more aggressive firms in general when compared to SMEs. The VLEs also show higher levels of perceived relative profitability and relative adaptability than SMEs. However, no differences are found between VLEs and SMEs regarding profitability when considering accounting returns. It appears that size is a critical factor to be considered in the financial services industry.

INTRODUCTION

The purpose of this paper is to examine empirically the relationship of organizational size to the strategic profiles of firms in the financial services industry. In particular, very large firms (VLEs) are compared to small and medium size firms (SMEs) across a range of performance, structural, and strategy constructs. The size of an organization often is viewed as a surrogate for the many detailed dimensions of an organization's structure and related decision making patterns (e.g., Dalton et al. 1980, Pugh et al. 1968). Therefore, we may expect important strategic profile differences between VLE and SME firms, which in turn may provide guidance to managers and other interested parties for future strategy decisions.

It is important to note that a precise determination of a strategic profile in any firm is not easily accomplished. Inconsistencies in the findings from empirical studies point to a conclusion that an acceptable strategy will depend on the situation (Provan 1989). But, the question of how the size of firms relate to strategy has seen renewed interest in the past decade, as the globalization patterns of large corporations impacts the survival of smaller firms in various countries around the world (Hutchinson et al 2005, Pan and Li 2000). This is especially relevant since the trend in a variety of industries is to fewer but larger firms (Daniels et al 1988). Additionally, many recent works have shown that small firms exhibit differences from larger firms on a variety of factors, which may or may not influence performance (c.f. Bhaskaran 2006, Taymaz 2005, Pompe and Bilderbeek 2005, Acar et al 2005, Biesenbroeck 2005, Smith et al 1986).

Thus, the current study attempts to determine whether company size differences across a profile of strategic constructs is evident in firms in the financial services sector. The majority of studies related to size and strategic decisions appear to investigate manufacturing firms (Van Biesenbroek 2005, Bommer and Jalajas 2002, Schuh and Triest 2000). Thus, this study adds to those in the minority which address non-manufacturing sectors of business (Wernz 2002, Hutchinson et al 2005, Daniels et al 1988). This paper begins with a review of the relevant literature, which is followed by a description of the sample, the measures, the analysis and results, and concludes with a discussion of the findings from the research.

VLES AND SMES

Organizational size is a characteristic of the firm representing how large or small a firm might be. It is measured in a variety of ways depending on the industry under study, including the total sales, number of employees, or asset-holdings of firms (Calof 1993, Dalton et al. 1980, Joaquin and Khanna 2001). Size is an important research variable as it often exhibits an association with the major characteristic descriptors of decision making outcomes: organizational structure, strategy, and performance. In particular, it is widely accepted nowadays that small and large firms differ in many ways, not limited to the availability of funds for activities and management styles and objectives (Beaver 2003). These differences may result in divergent paths to success or failure in many industries.

The literature points to firm size as a determinant of company strategy as indicated by distinctive group membership, but with no clear conclusions evident as to which is better. Size appears to have some influence on export-related activity and strategy, but there is question as to whether it is more advantageous to be of large or small size (Bilkey 1987, Birch 1988, Calof 1993, Edmund and Sarkis 1986, Ekanem 2000, Joaquin and Khanna 2001, Moini 1995, Wolff and Pett 2000). The findings from other studies suggest no relationship between size and strategy (Francis and Colleen 2000, Leonidou and Katsikeas 1996). This may be due to the presence or absence of other important variables, such as export experience or foreign market knowledge, for example (Edmund and Sarkis 1986).

The size of firms is also shown to play an important role in organizational design. Larger firms are found to integrate operations over bigger areas than smaller firms: regional or global even (Dunning 1992). Also, larger firms show a more structured organization in general, being more centralized and using more non-personal forms of control over decision making (Ronen and Shenker 1985).

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Seven Rules for Closing a Deal in China

by Geoffrey James

If you’re outsourcing to Chinese manufacturers for the first time, you’re bound to make a few gaffes when dealing with a business culture so different from your own. Here are some rules of the road:

1. Never criticize the government.

In the United States, taking verbal shots at the government is almost de rigueur in business conversation. Not so in China. While savvy Chinese are well aware that their government has problems, openly criticizing the government, or even being on the scene of criticism, is a good way to end up with innumerable troubles when it’s time to make the obligatory kowtows. “The last thing you want is to be seen as a troublemaker,” says Usha Haley, professor of International Business at the University of New Haven in Connecticut.

2. Understand the limitations.

There are still many industries in China where the organization and ownership structure reflects the old communist system. The government is reluctant to restructure and privatize these firms, possibly creating unemployment. When dealing with such bureaucrats, you may need to understand the constraints under which they are working (such as the need to maintain full employment) in order to understand how to work most closely with them, according to James Mulvenon, a former China expert for the Rand Corp.

3. Don’t assume the contract is final.

In general, the Chinese place greater reliance upon personal connections and personal commitments than on what’s written on a piece of paper. As such, terms that are discussed prior to the signing of a contract often are only distantly related to the actual terms under which the deal will move forward. “After you sign the contract, there will likely be multiple requests to change the terms in order to make the deal more advantageous to the Chinese suppliers,” says Brad Finn, president of Marlboro Corporation, a wholesaler that works with Chinese manufacturers.

4. Try to cultivate the younger executives.

There is growing professionalism among younger Chinese executives, many of whom have earned MBA degrees from Chinese and American universities. Unlike their predecessors, such young executives are more likely to view business ethics and performance in a way that more closely reflects attitudes in the United States or Western Europe. They can help you understand what’s going on in more traditional enclaves of their firm, according to Diana Matthias, a Shanghai-based senior consultant for Rouse & Co. International, a company that consults on international intellectual property rights.

5. Be sure you’re speaking with the real decision-maker.

It’s not at all unusual for a Chinese business owner to remain in the background and let his negotiator pose as the decision-maker. This gives the real decision-maker the flexibility to deny any concessions that he doesn’t like and dictate better terms using your concessions (which you thought were mutual) as a baseline. “My advice is to simply walk away from the meeting if you find out they’re playing this game,” Finn says.

6. Beware of double-dipping.

Local representatives frequently position themselves to get paid both by the company that they represent (meaning you), and the company with which they’re negotiating, according to Tim Wang, regional president of Novellus China, a subsidiary of semiconductor equipment-maker Novellus. But don’t get too heated if you discover an apparent conflict of interest. In China, this is not considered a violation of professional ethics but a natural consequence of being in the advantageous position of being an intermediary.

7. Enjoy the inevitable banquet.

When you visit China, you’ll likely end up attending one or more ceremonial banquets, where a wide variety of traditional dishes will be served. The host earns status by providing unusual or rare foods, which probably will not be at all like the Chinese food you’re used to eating in the United States. You’ll be expected to try every dish, lest you insult the host by refusing. The last time this writer was in China, the banquets included pig’s ear, which tasted like rank bacon; turtlehead soup, without a visible head, thankfully; and an item listed on the menu as “boner-less chicken.” Bon appetit!

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