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THE HONG KONG INSTITUTE OF CHARTERED SECRETARIESTHE INSTITUTE OF CHARTERED SECRETARIES AND

ADMINISTRATORS

International Qualifying Scheme Examination

STRATEGIC AND OPERATIONS MANAGEMENTDECEMBER 2015

Suggested Answer

The suggested answers are published for the purpose of assisting students in theirunderstanding of the possible principles, analysis or arguments that may be identifiedin each question

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SECTION A

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Beyond Corporate Social Responsibility: The Case of Primark

Primark is one of the rapidly developing apparel retailers in Europe. Primark hasalmost 200 stores across Ireland, the UK, Spain, the Netherlands, Germany,Belgium and Portugal. Primark’s target customer is fashion-conscious and wantsvalue for money. Primark can offer value for money by sourcing productsefficiently, making fashionable items, using local fabrics and trims, focusing on themost popular sizes, buying in volume, and not spending heavily on advertising.Primark’s business growth comes from meeting these customer needs whilstcontinuing to expand stores and move into new markets.

Primark is able to offer value and low prices because its business model is basedon high sales volumes and low retail margins with minimal advertising. Thecompany keeps costs down by buying large quantities of items and enjoying theeconomies of scale resulting from buying in bulk. In addition, retail prices are keptlow through lean production and efficient operational practices. For example, usingoff-season factory time for production means that the costs are lower than at peaktime. This is good for Primark, but it also means factory employees get work andpay when they might not otherwise have been needed. Therefore, its practices areboth efficient and ethical at the same time.

Primark works with many third-party suppliers and wants to source ethically.Primark is very clear about where it stands on business ethics. 'As an internationalbrand with a global supply chain we have a responsibility to act ethically. Weembrace this responsibility as an opportunity to be a great force for good. Primarkis committed to providing the best possible value for our customers, but not at theexpense of the people who make our products.' In other words, this means makingsure that, throughout the supply chain, Primark's goods are manufactured undergood conditions and the employees in those factories are treated well.

Important business principles for Primark include respecting human rights andsetting guidelines for appropriate conditions of employment in its suppliers'factories. Primark has over 600 major suppliers in 16 countries. These companiesprovide employment for over 700,000 workers in three continents. Primark iscommitted to making sure that its partners, both factories and suppliers, also act

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responsibly towards their employees.

Primark works to ensure ethical sourcing in a number of ways. It has an EthicalTrade Director, whose role is to make sure Primark goods are sourced ethicallyand who leads a team of ethical managers and executives based in the keysourcing countries. Primark is a member of the Ethical Trading Initiative (ETI), abody whose aim is to improve the lives of workers across the globe. Primark basesits Code of Conduct on the International Labour Organisation's (ILO) Code. TheILO code describes a set of standards for international labour. These promoteopportunities for women and men to work in freedom, and with equity, security anddignity. Primark's Code of Conduct is translated into 26 languages, all publishedon its website, to ensure clear communication on standards. The Code of Conductsets out the company's policy and is part of its legal terms and conditions.

Primark works closely with the suppliers and factories that produce its goods. Itprovides training for suppliers, factories and its own buyers so that theyunderstand ethical issues. For example, it offers guidance on issues such as childlabour and home working in Asia, as well as immigration and right-to-work issuesin the UK. When selecting new suppliers and factories, Primark requires them togo through a selection process. This enables Primark to establish if workingconditions are appropriate or if improvements are necessary before the suppliercan be approved.

All Primark suppliers are also subject to thorough independent audits andfollow-up visits to make sure that the supplier is maintaining ethical practices. Thisinvolves an audit of labour standards. An auditor is someone who checks factoriesto ensure that Primark's Code of Conduct is being implemented within the factory.This includes, for example, checking that the factory has the appropriate firesafety equipment and that staff have been trained how to use it, to ensuring that allemployees receive the wages and benefits they are entitled to.

As with most businesses, Primark's main objective is to be a profitable andsustainable business. Consequently, it is always seeking opportunities forprofitable growth to ensure these primary objectives are achieved year-on-year. Atthe same time, Primark is committed to acting as a responsible corporate citizen.

Operating in an ethical way may mean a business incurs additional costs when

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compared with other retailers and companies who may not do business in thesame way. For example, Primark bears the cost of carrying out all audits. Thenthere are its costs associated with working with ethical partners. An example of thisis Primark’s partnership with Nari Uddug Kendra (NUK). This is an organisationsupporting women's rights and health in Bangladesh. Costs to Primark of workingin an ethical way also include: the employment of the global Ethical Trade team,training its buyers on all ethical trade issues, managing and paying for externalaudits, and helping suppliers put right issues raised by audits, through training andsupport from the Primark Ethical Trade team. However, rather than seeing theseactivities as costs, Primark believes that they enable the business to operate in asustainable and well-managed way.

Transparency is an important part of this process. Transparency means thebusiness is open to people seeing how it manages its relationships with suppliers.In turn, suppliers’ practices also need to be transparent. The alternative would befor an organisation to ignore ethical behaviour. However, this would rapidly lead toa decline in brand reputation and consumers could move to purchasing fromcompeting retailers behaving more ethically. Operating in the 'right way' istherefore not just appropriate for ethical reasons, but is also good businesspractice.

(Adapted from The Times 100 Case Studies)

REQUIRED:

1. (a) Identify the ethical stance of Primark. Explain how Primark has incorporatedstakeholder interests and expectations in its purpose and strategy.

(20 marks)

Ans (a) The ethical stance of a business is the extent to which it is prepared to exceed itsminimum obligations to stakeholders. A key issue for managers, therefore, is tounderstand and influence the ethical stance of the organisation. Common ethicalstances include:

Short-term shareholder interests

At one extreme, some organisations take the view that the only responsibility ofbusiness is the short-term interests of shareholders. Their ethical stance is that

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since it is the domain of government to prescribe, through legislation, theconstraints that society chooses to impose on businesses, they pursue economicefficiency. The organisation will meet these minimum obligations, but no more.

Long-term shareholder interests

This is similar to the previous group but recognises the long-term benefit to theshareholder of well-managed relationships with other stakeholders. Many of theissues are therefore managed actively and carefully as a matter of long-termself-interest.

Multiple stakeholder obligations

These organisations take the view that stakeholder interests and expectationsshould be more explicitly incorporated in their purposes and strategies. These willoften go beyond the minimum obligation of corporate governance. Corporatemanagers are seen as trustees of the assets of the business. They also argue thatthe performance of the organisation should be measured in much more pluralisticway. Primark belongs to this group as the case shows that it has explicitlyincorporated CSR in its strategies. For example, Primark works to ensure ethicalsourcing in a number of ways by incorporating the International LabourOrganisation’s (ILO) code in its sourcing practice, working closely with suppliersand factories that produce its goods to avoid unethical practices, and carrying outaudits to ensure it meets its goals.

Shaper of society

The final group represents the ideological end of the spectrum. They havepurposes that are concerned with shaping society and financial considerations areof secondary importance or are a constraint.

The major stakeholders of Primark include: shareholders and investors,employees, consumers, the public, suppliers and distributors, and localcommunities. Primark incorporates stakeholder interests and expectations in itspurposes and strategies in several ways:

Consumers: Primark is able to offer value and low prices because its businessmodel is based on high sales volumes and low retail margins with minimaladvertising. The company keeps costs down by buying large quantities of items

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and enjoying the economies of scale resulting from buying in bulk. In addition,retail prices are kept low through lean production and efficient operationalpractices.

Suppliers: Primark works with many third party suppliers and a key concern is thatit sources its products ethically. Primark has embraced this responsibility as anopportunity to be a great force for good. Throughout the supply chain, Primark'sgoods are manufactured under good conditions and the employees in thosefactories are treated well.

Labour: Important business principles for Primark include respecting human rightsand setting guidelines for appropriate conditions. Primark is committed to makingsure that its partners, both factories and suppliers, act responsibly towards theiremployees. Primark is a member of the Ethical Trading Initiative (ETI) to improvethe lives of workers across the globe. Primark bases its Code of Conduct on theILO’s code.

Shareholders and investors: As with most businesses, Primark's main objective isto be a profitable and sustainable business. Consequently, it is always seekingopportunities for profitable growth to ensure these primary objectives are achievedyear-on-year. At the same time, Primark is committed to acting as a responsiblecorporate citizen.

1. (b) Use Primark as an example to discuss how an organisation can combine itscorporate social responsibility (CSR) practices with its business strategies.

(20 marks)

(Total: 40 marks)

Ans (b) For any company, strategy must go beyond best practices. It is about choosing aunique position ̶ doing things differently from competitors in a way that lowerscosts or better serves a particular set of customer needs. These principles apply toa company’s relationship to society as readily as to its relationship to its customersand rivals.

Strategic corporate social responsibility (CSR) moves beyond good corporatecitizenship and mitigating harmful value chain impacts to mount a small number ofinitiatives whose social and business benefits are large and distinctive. StrategicCSR involves both inside-out and outside-in dimensions working in tandem. It is

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here that the opportunities for shared value truly lie.

Many opportunities to pioneer innovations to benefit both society and a company’sown competitiveness can arise in the product offering and the value chain.Toyota’s response to concerns over automobile emissions is an example.Toyota’s Prius, the hybrid electric/gasoline vehicle, is the first in a series ofinnovative car models that have produced a competitive advantage andenvironmental benefits. Hybrid engines emit as little as 10% of the harmfulpollutants conventional vehicles produce while consuming only half as much fuel.Voted 2004 Car of the Year by Motor Trend magazine, Prius has given Toyota alead so substantial that Ford and other car companies are licensing thetechnology. Toyota has created a unique position with customers and is well on itsway to establishing its technology as the world standard.

Strategic CSR also unlocks shared value by investing in social aspects thatstrengthen the company’s competitiveness. A symbiotic relationship develops: thesuccess of the company and the success of the community become mutuallyreinforcing. Typically, the more closely tied a social issue is to the company’sbusiness, the greater the opportunity to leverage the firm’s resources andcapabilities, and to benefit society.

While responsive CSR depends on being a good corporate citizen and addressingevery aspect of social harm the business creates, strategic CSR is far moreselective. Companies are called on to address hundreds of social issues, but onlya few represent opportunities to make a real difference to society or to confer acompetitive advantage. Organisations that make the right choices and buildfocused, proactive, and integrated social initiatives in concert with their corestrategies will increasingly distance themselves from the pack.

Combining CSR with the value chain

Pioneering value chain innovations and addressing social constraints tocompetitiveness are each powerful tools for creating economic and social value.However, as our examples illustrate, the impact is even greater if they worktogether. Activities in the value chain can be performed in ways that reinforcesocial improvements. At the same time, investments in a competitive context have

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the potential to reduce constraints on a company’s value chain activities.

For example, Primark may consider providing training to unemployed residents.This shows support for local community service organisations, which identify,screen, and refer the candidates to Primark. The net result is both a major benefitto communities and a reduction of Primark’s cost of recruiting entry-levelemployees.

When value chain practices and investments in a competitive context are fullyintegrated, it becomes hard to distinguish CSR from the day-to-day business ofthe company. For example, Primark may require its suppliers to work with smallfirms in developing countries to source basic commodities, such as cotton, silk,and wool, on which much of its global business depends. The company’sinvestment in local infrastructure and its transfer of world-class knowledge andtechnology over decades has produced enormous social benefits throughimproved health care, better education, and economic development, while givingsuppliers direct and reliable access to the commodities it needs.

Create a social dimension to the value proposition

At the heart of any strategy is a unique value proposition: a set of needs acompany can meet for its chosen customers that others cannot. The moststrategic CSR occurs when a company adds a social dimension to its valueproposition, making social impact integral to the overall strategy. For example,Primark may consider reviewing the value proposition to include more socialdimensions, such as other retailers have done through, for example, entering thewhole food market. After strengthening the value proposition, the company mayadjust its value chain to reinforce the social dimensions of its value proposition,and this can distinguish Primark from its competitors.

Organising for CSR

Integrating business and social needs takes more than good intentions and strongleadership. It requires adjustments in organisation, reporting relationships, andincentives. Few companies have engaged operating management in processesthat identify and prioritise social issues based on their relevance to businessoperations and their importance to the company’s competitive position. Evenfewer have unified their philanthropy with the management of their CSR efforts,much less sought to embed a social dimension into their core value proposition.

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Doing these things requires a far different approach to both CSR and philanthropythan the one prevalent today. Companies must shift from a fragmented, defensiveposture to an integrated, affirmative approach. The focus must move away froman emphasis on image to an emphasis on substance.

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SECTION B

2. (a) While most business leaders appreciate the strategic value of knowledge and theneed to manage their knowledge assets, many of them seem unable to derive realbenefits from their efforts.

REQUIRED:

Use some examples to illustrate the potential issues in implementing aknowledge management system effectively.

(10 marks)

Ans (a) Structure and culture: The current structure and culture of an organisation may notbe conductive to sharing knowledge, for example, if there is little communicationbetween departments in an organisation, or if staff are reluctant to shareknowledge for fear that it will reduce their power within the organisation. Theseinherent barriers will have to be overcome in order to implement the knowledgemanagement system successfully.

Technological infrastructure: If an organisation lacks a suitable informationinfrastructure which will allow information to be stored and accessed, one will haveto be installed before knowledge can be shared across the organisation. Theremay be significant costs associated with installing these infrastructures.

Incompatible systems and sources of information: Problem could arise if somedivisions or departments record data or information in systems which areincompatible with those used by other divisions or departments. Such a situationwill mean that data or information will have to be transferred into a new commonformat before they can be shared, but there is a risk that errors or omissions couldresult from the resulting conversion process.

Resistance to change: Staff in different areas of an organisation may already havetheir own preferred ways of organising data. However, this may not be compatiblewith the common format in which data is being held on the network. Staff may bereluctant to change their current practices, particularly if they are not givenadequate training and if they are not given sufficient time to adapt to them.

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2. (b) Information technology is changing the competitive landscape for variousindustries, becoming a competitive weapon. For example, supermarkets nowprovide home shopping services supported by information technology. Thedevelopment of social media is enabling organisations to connect with theirconsumers more effectively.

REQUIRED:

Apply Porter’s five-force model to analyse the impact of informationtechnology on competitive forces.

(10 marks)

(Total: 20 marks)

Ans (b) Barriers to entry and IT

IT can raise entry barriers by increasing economies of scale, raising the capitalcost of entry or effectively expanding distribution channels by tying customers andsuppliers into the supply chain. IT can also surmount entry barriers such as theuse of telephone banking.

Bargaining power of suppliers and IT

IT enhances supplier information available and increases the number ofaccessible suppliers, which increases the bargaining power of firms. In contrast,supplier power can be shared by the information based supply chain. Supplierscan be integrated with the firm’s administrative operations by a system ofelectronic data interchange, which increases the switching costs of firms.

Bargaining power of customers

As in the case of suppliers, IT can lock customers in by raising switching costs forcustomers and using customer information systems to provide products that aretailored to the needs of different segments.

Substitutes

In certain situations IT itself is the substitute product. For example,video-conferencing services might be substituted for air transport in providing ameans by which managers from all over the world can get together in a meeting.Email becomes a substitute for phone calls, and mobile text messages asubstitute for email.

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IT and the state of competitive rivalry

IT can be used in support of a firm’s competitive strategy of cost leadership anddifferentiation. IT can also be used in a collaborative venture, perhaps to set upnew communications networks. For example, competitors in the financial servicesindustry share the same ATM networks.

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3. The Toyota Production System invites team members to think about each processand make timely decisions in order to keep the process running smoothly ratherthan merely operating like machines. This involvement creates responsibility forthe success of the process, increasing both morale and quality. Continuousimprovement involves everybody, relying on the extensive knowledge, skills andexperience of the people working directly in the process. For example, about3,000 proposals for improvements are made at Toyota Material Handling Europe’sproduction sites each year. Well-run businesses strive to maintain continuousimprovements in the workplace.

REQUIRED:

3. (a) Explain the concept of continuous improvement and examine the keyfactors required to implement continuous improvement in an organisation.

(10 marks)

Ans (a) Continuous improvement is an ongoing process that involves a continuous searchto reduce costs, eliminate waste, and improve the quality and performance ofactivities that increase customer value or satisfaction. It is associated withincremental changes in the day-to-day process of work suggested by employeesthemselves. The process must be an ongoing and sustained process whichregularly reviews the business methods in the drive for improvement.

Factors for continuous improvement

Total commitment from senior management

Continuous improvement is about the entire organisation and everything it does. Ithas to be a prime concern of executive management and its success dependsupon commitment from the top. The commitment must also be highly visible. It isnot enough to have a quality policy signed by the chief executive. If executivemanagement does not demonstrate its commitment by doing what it says it will doit cannot expect others to be committed to the policy.

Involvement of employees

Opportunity for all employees to contribute to the process: Tactical andoperational level staff, rather than senior management, usually have theinformation required for improving the company’s operation. The most successful

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continuous improvement programmes are the ones that have the highest staffinvolvement.

Communication with employees

Good, objective information about the organisation’s environment so that itsoutcomes and its process can be evaluated effectively. Employees should beaware of their roles in the achievement of the organisation’s strategy. Two-waycommunication between top management and employees should be adoptedeffectively throughout the organisation.

Management of the performance and contribution of employees

Measuring evaluation of progress against key performance indicators andbenchmarks. Some organisations have found that simply displaying productivityand quality data every day or week raises production and quality because staffcan tell when they are doing things right and so find themselves in a personalcontinuous cycle. The organisation may implement clear and recognised qualitymanagement systems and standards.

3. (b) Critically discuss the importance of employee involvement and employeeempowerment in the successful implementation of total qualitymanagement.

(10 marks)

(Total 20 marks)

Ans (b) Employee involvement is very important in any TQM initiative as it is a systemwherein employees are encouraged to use their expertise and knowledge tosuggest methods for improvements in their work areas. These suggestions couldrelate to improvements in the job, the product, the work atmosphere or thecompany as a whole. Many companies have ventured into a participation-style ofmanagement by involving employees in the problem solving and decision makingprocesses.

One of the important concepts of TQM is employee involvement. This is contrastto conventional quality assurance management practices, where managementtakes all decisions and workers just follow them to accomplish their jobs. Thistop-down management style is slow, inflexible, and has little room for competition,especially where survival in today’s time-starved, customer driven market requiresrapid response times from quality control in manufacturing or other businesses for

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the ever-changing needs of the customer.

Employee empowerment has two key aspects: allowing workers to have thefreedom to decide how to do the necessary work using the skills they possess;and acquiring skills as necessary to be an effective team member. While theactual practice of employee empowerment varies across organisations,empowerment is based on the fundamental concepts of job enlargement and jobenrichment. Job enlargement involves changing the scope of the job to include agreater portion of the horizontal process. Job enrichment involves increasing thedepth of the job to include responsibilities that have traditionally been carried outat higher levels of the organisation.

In TQM, the decision-making process should be to a high degree decentralisedand individuals or work-designed teams should be responsible for a complete partof work processes. For instance, Saturn, a highly successful American carmanufacturer, empowered its employees by turning assembly lines into dedicatedprocess-oriented work stations solely managed by the work team. Even the designprocess involves a high degree of employee participation. Empowerment becamedirectly linked to responsibility, and employees make suggestions how to improveprocesses. The ultimate success of a quality programme is based on its ownershipby employees and their empowerment to make changes. It is crucially importantthat management value employee suggestions and manage them accordingly.

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4. To compete effectively, a company needs to adjust its internal strengths to theopportunities in the environment in which it operates. Managers need to identify,combine, recombine, and manage their resources, competencies and capabilitiesto explore their potential and perform better than their competitors in thesatisfaction of consumer needs, preferences and desires. In other words, whenformulating strategy, businesses should consider the match between their owncompetencies and the critical success factors required to compete profitably intheir chosen market.

REQUIRED:

4. (a) Use some examples to identify the major sources of critical success factorsand how an organisation manages strategy by using critical success factors.

(10 marks)

Ans (a) Critical success factors (CSFs) are performance requirements that arefundamental to an organisation's success. In this context CSFs should thus beviewed as those product features that are particularly valued by customers. This iswhere the organisation must outperform the competition.

Common sources for CSFs include:

● The industry that the business is in – each has CSFs that are relevant to anycompany within it. For example, the car industry must have as one of its CSFs‘compliance with pollution requirements regarding exhaust gases’.

● The company and its context ̶ its competitive strategy and its geographiclocation. For example, a firm that has decided to compete on the basis ofquality could have CSFs relating to identifying and delivering key productfeatures that are valued by customers.

● Market environment – the political, social, economic, and demographicenvironmental changes in the country or countries that the organisationoperates in. For example, in a time of oil shortages ‘energy supply availability’could be a critical success factor.

To manage strategy by using CSFs, an organisation should:

● Identify the CSFs of the industry.

● Identify the competences that must be displayed if the CSFs are to be

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achieved.

● The core competences identified must then be considered to determinewhether they are adequate to provide genuine competitive advantage, orwhether they must be improved or supplemented.

● A key performance indicator must be identified for each competence so thatstrategic control may be exercised.

● Competitors’ responses must be monitored and their efforts on the CSFstructure forecast.

4. (b) Critically discuss how an organisation can use resources and competencesto develop strategic capabilities.

(10 marks)

(Total 20 marks)

Ans (b) Strategic capabilities have elements of both resources and competences.Resources are assets that organisations have or can call upon (e.g. from suppliers)(‘what we have’). Competences are the ways those assets are used or deployedeffectively (‘what we do well’).

Resources are certainly important but how an organisation employs and deploys itsresources matters at least as much. There would be no point in havingstate-of-the-art equipment if it were not used effectively. The efficiency andeffectiveness of physical or financial resources, or the people in an organisation,depend not just on their existence, but on the systems and processes by which theyare managed, the relationships and co-operation between people, theiradaptability, their innovatory capacity, the relationship with customers andsuppliers, and the experience and learning about what works well.

For example, a company may develop its physical capability by having machines,patents, buildings, database, and computer systems and use these resourceseffectively and efficiently. The supply of funds and cash flows are financialresources available. A company could develop its financial capability when it hasthe ability to raise funds and manage cash flows. Quality managers and employeesact as a basis for developing human capabilities. To build up its strategic humancapabilities, an organisation should know how to enhance people’s skills,knowledge, and experience, and motivate them to contribute to the success of theorganisation.

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Strategic capabilities are of value when they provide a potential competitiveadvantage in a market or at a cost that allows an organisation to raise acceptablelevels of return. Strategic capabilities allow the company to take advantage ofopportunities and neutralise threats, offer value to customers, and allow anorganisation to cut costs.

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5. Tesco began business as a food retailer in 1919 and now has over 2,200 stores inEurope. As a retail conglomerate, Tesco also offers alternative goods andservices such as insurance, banking and online shopping. Tesco has become thelargest British retailer and has more than 468,000 employees. To support itsgrowth, Tesco needs staff that are motivated, flexible and well-trained and whorecognise customer needs.

Tesco states that its business depends on two groups of people: customers andstaff. It appreciates that staff are unique and have diverse lifestyles outside ofwork. To this end Tesco supports staff with a work-life balance and offers rewardsthrough flexible working, free or reduced-rate health benefits, discount gymmembership, competitive salaries, staff discounts, and company share options.

REQUIRED:

5. (a) To attract and retain the highest qualified and motivated employees, Tescoenables its employees to develop a balance between work and non-workcommitments.

Identify the effects of work-life balance on employees’ job performance.Explain how an organisation can improve the work-life balance of itsemployees.

(10 marks)

Ans (a) Work-life balance is about creating and maintaining supportive and healthy workenvironments, which will enable employees to have balance between work andpersonal responsibilities and thus strengthen employee loyalty and productivity.

Of all the job factors that influence work-life conflict, the amount of time spent atwork is the strongest and most consistent predictor. The higher levels ofwork-to-family conflict reported by managers or professionals often are a functionof their longer work hours. Other reasons include: job security, support from one’ssupervisor, support from co-workers, work demands or overload, work-roleconflict, work-role ambiguity, job dissatisfaction, and the extensive use ofcommunication technology that blurs the boundaries between home and work.

Long work hours and highly stressful jobs not only hamper employees’ ability to

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harmonise work and family life but also are associated with health risks, such asincreased smoking and alcohol consumption, weight gain and depression.Work-life conflict has been associated with numerous physical and mental healthproblems.

Work-life conflict has negative implications on family life. Employees’ workresponsibilities interfere with their ability to fulfil their responsibilities at home. Theexpectations of a 24/7 connection and increasing pressure of globalisation arebeginning to bring new demands from employers.

A wide variety of practices are currently being used to help employees achieve awork-life balance. It is important to note that some work-life balance programmeshelp employees handle stress and otherwise cope more effectively while otherprogrammes help to reduce the absolute stress levels by rebalancing work andlife. For example, some companies may support employees with various wellnessprogrammes such as healthy eating workshops and stress managementprogrammes. Many employers are offering longer vacation times. Somecompanies offer ‘flex’ days. Interestingly, sick days tend to go down once anemployee is ‘entitled’ to three weeks or more a year of holidays.

Human resources policies that can be used to increase work-life balance includeimplementing time off in lieu of overtime pay arrangements, providing a limitednumber of days of paid leave per year for child care, elderly care or personalproblems, or having policies around weekend and evening use of laptops andsmart phones. Firms may need to reduce the amount of work given to eachemployee. To accomplish this, employers can hire new people, reduce time spentin job-related travel, allow for job sharing, or re-evaluate the work itself and how itis structured and organised with work process improvements and/or reengineeringof work. Finally, self-management is important; people need to control their ownbehaviour and expectations regarding work-life balance.

5. (b) In order to manage staff performance, Tesco uses a range of methods to collectdata and evaluate progress against targets.

Discuss the key features of an effective performance appraisal system.

(10 marks)

(Total: 20 marks)

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Ans (b) The key features of effective performance appraisal system include:

Reports on employees should be made in writing and at fixed intervals. Staffappraisal is a sensitive operation. The report is part of a record which chartsan employee’s progress within the organisation. The appraisals should becarried out regularly and depend on the nature of the employee’s work.

Written reports should be objective. To avoid an employee’s superiorassessing them in a subjective manner, the assessment should require theassessor to provide details on their assessment, which reduces the marginfor subjective responses.

Appraisals should be consistently applied. The use of detailed assessmentforms could increase consistency; however, this is only the beginning of theappraisal process. Care must be taken to ensure consistency in performanceinterviews and other stages.

Assessments should be discussed with the person assessed. If employeesdo not know what is being assessed, they will not be able to improve in areaswhere shortcomings have been noted. This could cause particular frustrationwhen inadequate feedback has been provided to employees.

Employees should be encouraged to contribute to the appraisal process.Ideally, the employee should have read the assessment in time to considerhis response before being called to interview. The interviewee should beencouraged to talk about his career plans, his knowledge and skills and howthey could be put to better use, and to make suggestions for improving theway his work is carried out.

There should be adequate follow-up. To enhance effectiveness of this system,employees must have confidence in the system. This will only happen if resultsare seen to follow from the assessments.

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6. Organisational culture is important in influencing performance. A company with astrong culture may have higher agreement among members about what theorganisation stands for. Such unanimity of purpose builds cohesiveness, loyalty,and organisational commitment, which leads to lower employee turnover.However, research suggests that it takes three to eight years to change anegative culture, or to move the culture into a new direction.

REQUIRED:

6. (a) Johnson and Scholes (2002) offer the cultural web as a way to analyseorganisational culture.

Use some examples to explain the key components of the cultural web andillustrate the use of the cultural web in analysing the culture of anorganisation.

(12 marks)

Ans (a) There are different elements which could be applied to analyse the culture of anorganisation.

Routine and rituals: Routines are the ways that members of the organisationbehave towards each other, and towards those outside the organisation, makingup ‘the way we do things around here’. The rituals of organisational life are thespecial events through which the organisation emphasises what is particularlyimportant and reinforces culture. Examples can also be thought of as relativelyinformal processes such as drinks in the pub after work.

Stories: The stories told by members of the organisation to each other, tooutsiders, to new recruits and so on, embed the organisation’s history andindicate important events and personalities. They typically concern successes,disasters, heroes, and mavericks who deviate from the norm. They distil theessence of an organisation’s past and legitimise types of behaviour.

Symbols: Symbols such as logos, offices, cars and titles, or the type of languageand terminology commonly used, become shorthand for the nature of theorganisation. For example, in conservative organisations it is likely that there willbe many symbols of hierarchy or deference to do with formal office layout,

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differences in privileges between levels of management, and the way in whichpeople address each other.

Power structures: The most powerful groupings within the organisation are likelyto be closely associated with this set of core assumptions and beliefs. Forexample, accountancy firms may offer a range of services, but typically the mostpowerful individuals are qualified chartered accountants with experience in theaudit practice. In some organisations, power could be lodged within other levelsor functions: for example, with technical experts in a high-tech firm.

Control systems: Measurement and reward systems emphasise what it isimportant to monitor in the organisation, and to focus attention and activity uponthese areas. Reward systems are important influences. For example, anorganisation with individually based bonus schemes related to sales could find itdifficult to promote strategies requiring teamwork and an emphasis on qualityrather than volume.

Organisational structure is likely to reflect power structures and again delineateimportant relationships and emphasise what is important in an organisation.Formal hierarchical, mechanistic structures may emphasise that strategy is theprovince of top managers.

6. (b) Examine how managers can change the negative culture of an organisationeffectively.

(8 marks)

(Total: 20 marks)

Ans (b) The overt beliefs expressed by managers and staff can be used to conditionpeople, to sell a new culture to the organisation by promoting a new sense ofcorporate mission, or to promote a new image. Slogans, mottos, myths, and soon can be used to energise people and to promote particular values which theorganisation wishes to instil in its members.

Top management should demonstrate their impetus for cultural change,especially where changes in structure, authority relationships, or work methodsare involved. The first step in deliberate cultural change should involve a powerfulindividual or group to commit to the new vision or mission of the organisation.

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The reward system can be used to encourage and reinforce new attitudes andbehaviour, while those who do not commit themselves to the change miss out, orare punished or pressured to buy in or get out.

The recruitment and selection policies should reflect the qualities desired ofemployees in the new culture. To an extent these qualities may also beencouraged through induction and training.

Visible emblems of the culture – for example design of the work place and publicareas, dress code, status symbols ̶ can be used to reflect the new style.

END