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Back to ... Workinfo.com Human Resources Magazine Volume 1 Issue
11, 2007
If there is going to be an African Renaissance, it will be founded
on an economic one, and will be led by South Africa. Without economic strength, socio-political survival, let alone
renaissance, is impossible. And no other African economy really
has the capacity to lead Africa
into the future.
In
pursuit of taking on this challenge, South African business is
currently awash with an unprecedented range of new initiatives –
some borrowed, some home-grown, as we try to find the key that
will unlock our competitive potential – transformation, Ubuntu,
restructuring, downsizing, restyling, rightsizing, rightstyling?
The list is seemingly endless and apparently diverse, yet whatever
the initiatives call themselves most have organisational
restructuring as their central focus and cost-cutting as their
central goal.
Perhaps
this is understandable. On re-entering the global village and its
economy, South African corporations face two simultaneous – and
at first glance conflicting – pressures. We face internal,
socio-political pressure to transform, while trying to meet
external, competitive pressures to perform. The challenge lies in
how we have interpreted these pressures and reacted to them. I
will argue that in most instances we have missed the boat and that
many transformation interventions will have at best limited and
short-term impact, at worst leave their architects worse off than
before. I will also argue that business education should form the
core logic and foundation of transformation, and present findings
of this approach in a range of SA corporations.
The pressure to transform is largely being seen as a
socio-political and cultural imperative. It should, in fact, be
seen first and foremost as a business one. It is not that our
organisational structures and processes are somehow un-PC. It is
that they are ill-suited to business in the new international
game. Unfortunately, with a predominantly socio-political agenda,
transformation is widely viewed as a process, usually somewhat
resentfully undertaken, of restructuring the organisation and
making some affirmative action appointments. And, very often,
that’s it.
So
we have changed some of the positions in the team, and some of the
players. And now we wait for the results, too, to change. It just
doesn’t work that way. Organisations - like rugby teams - do not
improve simply because new people are in new positions.
So we find ourselves uncompetitive. Not surprisingly. After years of
isolation we have re-entered the global game, only to find that
the game itself has changed – leaving most of us behind. Most
critically, what makes an organisation competitive is no longer
merely a question of differentiating on the basis of quality and
price – low price, high quality products and services are now
taken as given. Our international competitors are producing great
products at low variable cost. Technology has ensured that. And
what has been our response? As our shareholders clamour for
increased profitability, we have taken the short-term (and
short-sighted) option – bring in the consultants and cut fixed
costs (particularly in the form of staff). Profits go up, fast,
and we look okay for a while. The likelihood of sustaining these
profits, though, is questionable. Heavy-handed cost-cutting has to
have an impact on productivity at some stage and our competitors
will simply keep reducing their prices until our margins have
disappeared, so that no amount of fixed costs cutting will make a
jot of difference.
The
real tragedy is that it is not only individual corporate profits
that will suffer. At a macro-economic level society itself will
feel the impact – from reduced profitability, to a shrinking tax
base and increased unemployment. Our markets will become more
unstable, investment less likely and a downward, self-regenerating
spiral inevitable.
Transformation should be driven by our need to be competitive. And
competitive advantage today, with technology as a given, is
essentially a function of two inter-related variables – a good
product or service, delivered with the combined, business-focused
energy of all the members of an organisation. We have some
reasonable products and services, but very limited
business-focused energy. Our energy tends to be focused elsewhere
(typically on internal fighting).
It
is the combined, business-focused energy in an organisation that
delivers the product or service at low cost, to a customer who is
delighted at the way he or she receives it. That is what will
determine one’s competitive advantage. And the only way we are
going to achieve this competitiveness is through transformation of
an entirely different kind – transformation of the way all staff
in our organisations see themselves – in relation to the
customer, to each other, vertically and horizontally, and to the
business itself, particularly in terms of each individual’s
value-adding role in that business.
Thus
restructuring alone, without a concomitant transformation of the
way people behave and relate to each other within the new
structures will prove of little value. It is rather like changing
the positions in a rugby team without mentioning that players
should occasionally pass the ball to each other. I often get the
sense that what managers are hoping is that they can finish with
the “transformation thing” and then return to the "good old
ways" of doing things – where staff accept management
decisions, unquestioningly, and all they need is some skills
training and an incentive scheme to get on with the job.
This
will not happen. The very rationale behind transformation is that
the old ways of doing things simply won’t work any more. We need
to get used to the fact that we are going to have to create new
business relationships within the organisation – because that is
how we will become competitive.
In fact without these changed business understandings and
relationships, restructuring and other transformation plans will
continue to be seen as yet another management plot and have little
more effect than re-arranging the deck-chairs on the Titanic. In
fact, badly handled, restructuring could itself become the iceberg
that sinks the enterprise. Many current transformation plans are
foundering as confused, fearful and resistant staff, quite
understandably, white-ant the process.
To
revisit the sports metaphor. If we played rugby like we run our
organisations we wouldn’t need to go on tour. We would manage to
lose the game without needing competitors to beat us – our
internal wrangling would see to that. The bottom line is that we
don’t function effectively as teams - vertically or
interdepartmentally. This would be like a rugby team where the
forwards didn’t talk to the backs and the backs didn’t pass
the ball to each other. To compete effectively, we need to do what
rugby has done – create unified and committed teams, where all
players understand the game, understand what is needed to win, and
who have the commitment and teamwork that ensures that this is
what happens. They win because they pass the ball; we lose because
we pass the buck.
How can we achieve in our organisations what we have achieved in
rugby? One problem is that in the organisational context achieving
commitment and teamwork has always been a daunting task and is
currently exacerbated by an ethos of confrontation, fear and anger
– often occasioned by the very changes that are supposed to help
us succeed.
The
answer lies not in fuzzy team-building or ‘empowerment’
programmes, nor in management shouting ever louder about the
necessity for change to an audience that does not necessarily
understand the underlying logic thereof. Successful change in
business must be founded on business principles and this has two
fundamental requirements – an organisation-wide understanding of
the business rationale for change, and change must go beyond
structures, into behaviours and relationships.
In
other words if you’re going to move James Dalton to full back
you’d better have a good reason for doing so, make sure he buys
into that reason and check that he knows how to add value in that
position. Once all the players know why transformation is
happening, how the new relationships are going to work, what the
rules and nature of the game are and what contribution they can
make, their ability – and commitment - to perform, will follow.
This
requires two fundamental changes in the way we are approaching
transformation – the way it is initiated and what, in fact, is
changed.
Our experience of transformation projects has indicated that the
majority are top-initiated and top-driven and the degree and form
of consultation (if any) is grudging and tokenist. Managers
constantly tell me that they do consult with staff – they tell
them what the project entails and show them the financials. This
is little short of silly, in cases where staff understanding of
the rationale for change and the meaning of the financials is
limited, or absent entirely.
This
would be rather like asking me to play American football – a
waste of time. The rationale behind the game completely eludes me.
Behemoths with limited fashion sense tackle each other with little
evident interest in who has the ball. The game stops every few
seconds and the scoreboard (like financials to staff?) makes no
sense at all. Yet the Yanks love the game - understandably. They
understand its rationale and scoring system.
And
yet we complain because our staff are not as excited about our
transformation plans as we are. They just don’t seem motivated,
in spite of the incentive schemes we drafted with our consultants.
Basically, this should come as no surprise. Benchmark research by
French and Raven in the 60’s confirmed what we perhaps knew
intuitively – that motivation based on external influencers
(reward, punishment, authority etc.) was "public dependent"
(it only had an impact as long as the influencer was visible) –
and therefore difficult to sustain. The only sustainable form of
motivation is knowledge – one behaves in a particular way not
because one is going to be rewarded or punished for doing so, but
because doing so is inherently logical. Our experience has borne
out this research in the organisational context. Where there is an
organisation-wide understanding of business, and the business of
the organisation, the rationale behind the business and the logic
of success drives productive behaviour.
But
herein lies the rub. Understanding of the core principles and
causalities of business is typically not well understood in South
African corporations - particularly at lower staff levels. This is
not because of any lack of ability or interest – it is
predominantly the heritage of an education system driven by the
needs of ideologues, rather than the needs of our economy, and an
economy driven as an authoritarian, rather than participative,
enterprise.
Understanding what the level of business understanding is – and
why it is what it is – will help us in drafting a approach to
remedying it. The curriculum ideologues of past South African
education had little interest in promoting either critical thought
or business understanding. Critical thought might have led to
criticism and there was little point in teaching business at
large, as life and career chances were pretty much predetermined
by race. What business education there was (business economics,
bookkeeping) was typically touted as an option for the
academically less able. The impact of this is now being felt –
in our corporations, where understanding is limited, and in our
small business sector, sadly characterised by vast over-trading in
limited markets.
By
the same token the economic ideologues of the past were ultimately
into command economics – a form of ethnic socialism. In such an
economy, again, broadly held understandings of business were seen
as unnecessary.
For transformation to succeed, then, in achieving the dictates of
both socio-political and competitive pressures, creating
organisation-wide understandings of business at a generic level,
the business of the organisation itself, the rationale behind
change and the nature of that change, are mandatory. And given
that our education has failed to produce such understandings, it
is our responsibility to do so – not for any philanthropic
motives - but because doing so makes good business sense.
And
such business education must be serious. Firstly, too many past
programmes, seen as paternalistically “nice-to-haves” by
management, failed because they were simplistic. Secondly, the
education must be organisation-wide. Every staff member is
involved in the creation of value and to do so intelligently and
energetically must know what the creation of value means, and why
it is a good thing. Thirdly, the outcomes of such programmes must
be taken seriously by management. Our research has shown that
where business education has happened and managers have ignored
the outcomes – in the form of ideas from lower level staff and
new levels of energy, the result has been justified frustration.
Where the outcomes have been taken seriously the results have been
more than encouraging.
Let’s have a look at some of these outcomes. Over the past two
years we have been involved in the running of a business education
programme for some 16000 staff in small and large companies, in 6
African countries. Outcomes have been tracked in three ways –
informal feedback from clients, longitudinal studies by Dr Gillian
Godsell and Wits
Business
School
and a pre-post study at one large corporation by the National
Productivity Institute (NPI).
9.1
Dr Godsell’s findings
Investigating the impact of the programme at 12 corporations, 6-12
months after the event, Dr Godsell’s team found the following:
- Improved understanding of business principles,
and a desire to apply these principles to the participant's
own job
- Managers reported improved teamwork and
willingness to share tasks, as well as increased productivity
- Improved understanding and appreciation of the
role of management
- A reduction in conflict in the work situation
- Innovative ideas and efforts to implement cost
savings
- A greater sense of ownership of and
responsibility for their own work
- Demonstration of an active, "owning",
understanding of their work
- A greater sense of responsibility, increased
enthusiasm, and improved co-operation
- Greater satisfaction from and a growing sense of
competence in their work
Dr
Godsell also reported on the critical importance of a receptive
context within the organisation, to encourage the changes that
take place. Indeed, one of the strongest recommendations,
supported by the programme designers, is that managers and
supervisors attend the course with participants, increasing the
sense of teamwork, providing valuable mentoring opportunities,
sharing ideas and increasing understanding and appreciation of
each other's roles.
Dr
Godsell writes: "It should be noted that changes following
training depend not only on changed employee attitude and
understanding, but on the company welcoming and facilitating the
implementation of change. The Team Business training therefore
seems to work best when all levels of employees, including
supervisors and managers, attend the training course. These
changed perceptions seem to lead to a greater sense of
responsibility, increased enthusiasm, and improved
co-operation."
9.2
The NPI study
The findings are based on pre- and post-programme tests with 3
500 staff at a large, traditionally conservative corporation
undergoing transformation.
Business
knowledge - Pre-post programme shifts:
Climate change
– understanding, and accepting, the central tenets of
transformation.
These results, recorded in a state of uncertainty and
retrenchments, suggest that while total success is unlikely, a
critical mass can be achieved within which constructive change is
possible. The impact of the programme has been such that an
initial target of 6000 participants has been extended to the
entire 11500 workforce and levels not originally targeted,
including management, are now requesting the programme. The
results are extremely promising – not just for the organisation
concerned - but for all South African companies grappling with the
challenges of getting staff to focus their energy and
relationships on the company’s core business – and its
success.
In addition to formal research, the experience with this approach,
of people on the ground, provides an insight into what can be
achieved once business understanding is shared.
Learning
outcomes:
Understanding
how a business runs:
Revlon “Gives guys an understanding of the restraints under
which a business operates - a revelation to lower-level
employees.” Dave Lowery, Director Operations.
Understanding
of business philosophy:
Prochem “… comprehensive insight into the philosophy behind a
successful business, to all, in the same language”. Ntsuntsu
Mahlangu, Training Manager.
Operational
outcomes:
Staff
contribution to value adding:
SAB Beer Division “An ideal opportunity … everyone understands
the direct contribution they can make to the value-adding
process.” Mandy Rossouw, Finance T&D Manager.
Increased
productivity:
Tanzania
Breweries. “The programme has had a huge impact – increased
productivity, improved relationships, sticking to targets”
Malineo Mbegu, Plant Accountant.
Market
orientation:
Albany
Bakeries “a positive attitude amongst our workers …a far
better acceptance of our position in the market” Nic Penstone,
HR Director.
Organisational
outcomes:
Departmental
application:
Boart Longyear. “… our self-directed work teams have learned
to be more successful in their departments” Neville Jones,
Training Officer.
IR
improvements:
Albany
Bakeries “the TEAM BUSINESS intervention … negotiations of a
much higher standard with quicker results” Nic Penstone, HR
Director.
Commitment
to company’s success:
John Deere “Team Business really teaches employees about the
basics of business, and how they can influence the success of
their own company” Len Brand, Manager HR and Total Quality.
Creating
a common language of business:
Wits
Business
School
“Team Business provides an overview of how a business works for
all levels of employees in the organisation” Jonathan Cook,
Director MDU.
Team-building:
TEBA “An extremely beneficial course … to all levels of
employees in a team-building environment” Neil Rae, Personnel
Manager.
The irony, of course, is that we actually have it all. Minerals,
cheap power, good transport and communications infrastructures,
great weather, natural beauty and so on. What we haven’t got yet
is corporations that really operate as teams – with combined
intelligent energy. Transformation is thus not just a fad. It is
an absolute essential.
But
transformation must not just be about structures and costs. Real
transformation is about the way we operate, internally and
externally, as businesses. And it is simply inconceivable that
this can be achieved unless everyone understands what the
rationale, value and ethic of business is. So, we are not going to
achieve acceptance of the case for change by shouting louder or
offering more palliatives. We will only succeed once all of the
people in the organisation have a shared understanding of the
logic of business, and therefore the logic of change. Once this
happens, the necessity for and shape of change undertaken become
understandable, staff acceptance thereof more likely and
commitment to it achievable. Once understanding, acceptance and
commitment have been achieved, productive behaviour should follow.
And if productivity and competitiveness follow, so perhaps will
the African Renaissance.
Editor's notes:
For more results from studies done in collaboration with Business
Education Design, click
here.
Andrew
Hofmeyr
(BA,
HDE (PG), BEd. Med, MBA) lectured
in educational theory at the Johannesburg College of Education and
the University of the
Witwatersrand
from 1977 to 1992. During that time he studied research
methodology and educational technology on an international
fellowship at the University of Surrey, UK. He is a founder member
of Business Education Design, whose training programmes are
used by leading corporations and business schools in South Africa
and the
USA. He can be contacted at andrew@bused.co.za
and at the Business Education Design website www.bused.co.za.
Short summary
Transformation is not just about changing the people in the
structures in an organisation to suit the current socio-political
environment, but empowering employees and management to understand
and align themselves with organisational business strategy and
ethics.
Keywords and relevant phrases
African Renaissance, attitude, behaviour, business system,
business education, business goal, business principles, business
rationale, business strategy, business understanding, change
management, commitment, competence, competition, competitive
advantage, conflict, consultation, contribution, co-operation,
corporate culture, cost, critical thought, culture, downsizing,
economic strength, education, economy, empowerment, feedback, focus,
globalisation, initiate transformation, incentives, influencer,
investment, knowledge, learning, learning outcomes, logic,
macro-economy, mentorship, money market, motivation, network,
operational outcomes, organisational outcomes, ownership, participation,
performance management, profit, production, productivity,
relationship, responsibility, restructuring, rugby, quality,
service, sharing, socio-political pressure, teamwork, tokenism,
transformation, Ubuntu, understanding, unemployment, value
creation, value-added role.
Back to ... Workinfo.com Human Resources Magazine Volume 1 Issue
11, 2007
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