LESSON 2 - HOW TO MANAGE AND ORGANIZE YOUR DEPARTMENT TO MEET THE GOALS - 7S Model Management

The 7-S Model and how it can help improve your organization

The 7-S model is a useful way to look at the many interrelated aspects of a complex organization and it's a great way to help you understand your organization and leverage it to maximum efficiency and profitability.  It was developed by Tom Peters and Robert Waterman while working at McKinsey & Company.

The basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful.  It is the seven key elements of an organization that are critical to understand its effectiveness.  These seven elements are:  Strategy, Structure, Systems, Shared Values, Style, Staff, and Skills.  The beauty of the 7-S model is that it can be used in a wide variety of situations such as:

• A diagnostic tool for an ineffective organization.
• Improve the performance of a company.
• Guides organizational changes.
• Align departments and processes during a merger or acquisition.
• Determine how best to implement a proposed strategy.
• Combines rational and hard elements with emotional and soft elements.

Managers must act on all S’s in parallel as all S’s are interrelated.  All elements must align equally: 

The seven elements are distinguished in so called hard S’s and soft S’s.  The hard elements (consisting with Strategy, Structure, and Systems) are feasible and easy to identify.  They are easier to change than the others.  They can be found in strategy statements, corporate plans, organizational charts and other documentations.

The four soft S’s (consisting of Skills, Staff, Style, and Shared Values) are not as feasible.  They are harder to change directly, and typically take longer to do so.  They are harder to describe since capabilities, values and elements of corporate culture are continuously developing and changing.  They are highly determined by the people at work in the organization.  Effective companies, however, tend to pay as much attention to these factors as to the hard S’s.

Essentially, you'll want to run through each of the seven points and analyze how they fit in with your business. The concepts remain fairly similar, with some minor changes:

1. Strategy:  Refers to the plan or route-map to maintain competitive advantage.  What is your plan for the future?  How do you intend to achieve the objectives?  When was the last time you looked at your business plan?  What were the actions you took after looking at it?  When was the last time you updated your business plan?  How do you deal with competitive pressure?   What are the sources of sustainable competitive advantage such as cost, quality, service and technical leadership?   What are the key strategic priorities such as improved customer service?  How are changes in customer demand dealt with?  How do you deliver greater value to customers?
2. Structure:  Refers to the framework in which the activities of the organization’s members are coordinated.  A key function of structure is to focus employees’ attention on what needs to get done by defining the work they do and whom they should be working with.  How is the organizational structure designed right now?  How is the team divided?  How do the various departments coordinate activities?  How do the team members organize and align themselves?  Is decision making and controlling centralized or decentralized?  Is this as it should be, given what you’re doing?  Where are the lines of communication?  If you had to suddenly hire another 6 employees tomorrow, what would it look like?  What changes would you have to make?   If your customer has a complaint, or if there is some kind of emergency, how are problems escalated?  Is there a stated hierarchy and an "in-practice" hierarchy?
3. Systems:  Refers to the day-to-day processes and procedures.  Having effective systems helps reduce redundancy and streamlines process.  How do you gather business intelligence?  Do you have a unified database?  Does the organization have the systems it needs to run your department such as monitoring for customer satisfaction?  If you have to put together a report on something, could you do it quickly?  What happens if one of your staff leaves; will they take with them a key part of your business intelligence?  What are the main systems that run the organization?  Where are the controls and how are they monitored and evaluated?  What internal rules and processes does the team use to keep on track?
4. Shared Values: (also known as Superordinate goals):  Refers to the guiding principles of the organization.  These are the core values of the company and your department.  What are your core and stated values?  What do you measure and reward?  Are they the same thing?  How can you make minor changes to bring them in line with each other?  What are your stated values supposed to contribute to your business?  Do they contribute what you want them to contribute?  Does your employees have a shared understanding of why the company exists?  Do they share the same company and departmental vision?  How do they described the ways in which the company is distinctive?  Is the focus on quality, emphasis on people, etc?
5. Style:  Refers to the leadership approach and the organizations overall operating approach.  How would you describe your department?  How would your employees describe your department?  How would your competitors describe your department?  How would your customers describe your department?  How would your vendors describe your department?  If all five would say the same thing then you're on the right track; if they say different things then it could indicate a potential problem.  Is this same style and culture going to carry you through the next few years?  What will have to change for you to grow?  How participative is your management and leadership style?  How effective is your leadership?  How good are you at making decisions?  Where do you focus most of your time and attention?  Do your employees tend to be competitive or cooperative?  Are there real teams functioning within the organization, or are they just nominal groups?
6. Staff:  Refers to the staff levels and how people are hired, developed, trained, socialized, integrated, and ultimately how their careers are managed.  Are you staffed to serve customers adequately?  Will the addition or deletion of one or two staff members change anything?  How do you train and mentor employees?   Is your training methods effective?  Are your staff members trained to do their jobs?  Can you give them any other skills or resources to do their job better?  What's holding them back from helping you grow your business?  Are they "bought in" to seeing your business develop?  What positions or specializations are represented within the team?  What positions need to be filled?  Are there gaps in required competencies?
7. Skills:  Refers to the distinctive competencies of people within the organization.  What skills have you been hiring for?  What skills do you need?  What skills will you need in 1 or 2 years from now?  Does someone in your organization have those skills and are you grooming them for an important role in the next 1 or 2 years?  What skills will you need to possess in two years that are different than the skills you possess today?  What are the strongest skills represented within the team?  Are there any skills gaps?  What is the team known for doing well?  Do the current employees have the ability to do the job?  How are skills monitored and assessed?

An example of the 7-S model in action, for an improvement opportunity, would be if the department was misaligned resulting in poor performance. 

Employee and employer associations

In smaller businesses, if employees have any problems they can talk directly to their employer. However, in larger businesses that employs many people, it becomes extremely hard to do so. It is also hard for the Human Resources department to make decisions when they have about 500 employees (e.g. who will get a pay rise?). It becomes much easier if decisions are negotiated with a trade union, and employee association that represents them. This saves the management a lot of time because they do not have to see individual employees to discuss problems.



Employees might not be treated fairly at work. They may be overworked and underpaid. Trade unions has the role of bargaining with the HR department for better working conditions, conditions of employment and better pay.

Trade Unions

Employees with similar interests (higher pay) form a trade union. Trade unions are a form of pressure group with has the ability to influence business activity. There are four main types of trade unions:

• Craft union: For workers skilled at a particular job.
• General union: For unskilled and semi-skilled workers from different industries.
• Industrial union: For all types of workers in an industry.
• White-collar union: For non-manual or office workers.

Why do workers join a trade union?

Unions have a shop steward, who is an unpaid representative of the union. When someone is new to a job they may ask if they may want to join. If the person joins, they will have to pay an annual subscription. This money will be use for employing union officials who will represent the views of the employees. 

Advantages of a union

• Strength in numbers.
• Improved conditions of employment.
• Improved working conditions.
• Improved sickness benefits, pensions, and retrenchment benefits.
• Improved job satisfaction and encourage training.
• Advice/Financial
  support if a worker is dismissed unfairly/made redundant or is asked to do something not part of their job.
• Improved fringe benefits.
• Employment where there is a closed shop, which is when all employees in a business must belong to the same union.

Trade unions need to:

• Put forward their views in the media to influence government decisions on pay, employment, etc…
  
• Improve communications between workers and managers.
  

Closed shop

A closed
shop is when all employees must join one union in order to be employed. It is because its members feel that the union is doing nothing when non-members receive the same pay rises as them. They think it is unfair. Trade unions also gain greater strength if all the employees are members of the union. However, many people think that it is unfair since they are forced to join – they should be able to make their own decisions.

Single union agreement

Some companies have a single union agreement, when a business only agrees to deal with a single union. Any employees who want to join a union can join this union. It is becoming more popular nowadays because many employees are becoming multi-skilled, and do not know which union to join.

Advantages to the employee:

• Discussions are clearer if there is only one union to deal with.
  
• The union has greater power.
  
• No disagreements between different unions.
  
• A better working relationship should develop between the union and the management.
  
• Disputes are solved more quickly.
  

Advantages to the employer:

• Discussions are clearer.
• A better working relationship should develop, meaning that there would be less industrial disputes, benefiting both employees and employers.
• Disputes are solved more quickly.
• It is easier to agree to changes.

The structure of a trade union

The structure of different unions vary, but most elect a President or General Secretary to work full-time for and get paid by the union. They work at the union's headquarters. If the union is large, there will be union officials to take cared of members in different branches. Each branch represents its members in one work site, one factory, or one employer. Each branch has a representative. Unions are usually democratic and their union officers are voted up by the members.

Employer associations

Employers join what are called employer associations/employer federations/trade associations. Like trade unions, employer associations are made up of businesses and employers and who all pay annual fees for their benefits.

Advantages of joining an employer association:

• They negotiate with trade unions on behalf of their members.
  
• They give advice on employment laws, health and safety, taxation laws etc…
  
• Strength in numbers, they want to influence government decisions.
  
• They can share ideas and research facilities.
  
• They can organise bulk buying for members and get discounts.
  

Employer associations and the government.

Employer associations represent similar wants of businesses, and will try to influence the governments to give better conditions for businesses to prosper:

• They want the government to control things such as inflation, law and order, health and safety, and education for the workforce.
• Lower taxes.
• More freedom for businesses.
• Fair competition.
• Good transport infrastructure.
• Access to overseas markets.
• Reliable source of power.

Collective bargaining

This is when representatives of different interest groups negotiate and a collective agreement is made. The bargaining can be with businesses or with the government. Collective bargaining in businesses usually means that the representatives of one or more trade unions negotiate with one or more employers or employer associations to come up with a mutually acceptable agreement on conditions of employment.

Why trade unions want wage increases:

• Inflation.
• It is difficult to recruit qualified workers (so pay them more!).
• Pay differentials need to be maintained (everybody's wages should rise when the minimum wage rises).
• Changes in the workplace, e.g. new machinery.
• If there are increased productivity, wages should increase too. There are productivity agreements, when managers and trade unions agree to raise prices for increased productivity.

Often agreements take place and the "middle path" is taken. However, this does not always happen and if the workers and unsatisfied with the agreements, they will use industrial action.

Industrial action

There are various forms of industrial action that try to influence the decisions of employers. Here are some of their most comment forms.

Strikes

Strikes are when workers stop working and leave the workplace to protest against things.

• Token strike: Stoppage for an hour, a few hours or half a day to show strong feelings.
• Selective strike: Only a few workers go on strike. They are chosen by the union to cause as much disruption as possible.
• All out strike: All union members stop working and wait until a dispute has been settled.

Unions have to pay their members out of strike
funds as long as the strike has been approved by the union. All members vote to see if the strike is favourable or not.

Picketing

This is when workers stand outside the factory holding signs to protest and stopany people
going in and out as well as goods. This can halt the production process. The strikers gain publicity and gives the firm a bad image. This puts pressure on the firm to settle the dispute.

Work to rule

This is when workers stick rigidly to every rule and regulation in the business so that it slows
down the production process. They still get paid since they are technically doing nothing wrong, but this still causes a lot of disruption in the workplace.

Go slow

All workers deliberately do things very slowly.

Non-cooperative

Workers refuse to work with any new rules or follow any new practices they do not approve of.

Overtime ban

Workers refuse to do any overtime. This might damage the business if they need to complete some orders quickly. 

Possible harmful consequences of industrial action:

• For employers:
  • Loss of output.
    
  • Loss of profit.
    
  • Loss of customers.
    
  • Poor reputation.
    
  • Bad image.
    
• For employees:
  • Loss of wages.
    
  • They might lose their jobs if the company suffers low profits.
    
• For customers:
  • They need to find another supplier which might cost more (production is stopped)
    
  • Shortage of products.
    
  • Deliveries not made.
    
  • For other businesses:
    
    • May lose income.
      
    • May not have materials to produce goods.
      
• For the economy:
  • Workers have less money to spend.
    
  • Less tax revenue.
    
  • Country gain bad reputation for late deliveries.
    
  • Workers may be made redundant.
    
  • Exports may be lost and imports increased.
    

Employer's powers

However, employers can do something about the situation. Usually, they will sign a no-strike agreement with the union which also involves pay rises. The pay rises are determined by an arbitrator, an independent person who represents both sides and decides on the best decisions possible. Again, he will most likely choose the "middle path".
Nevertheless, if strikes do happen, here are some things employers can do:

• Dismiss all workers: This leave the company in a very terrible position since they can't produce goods or deliver goods.
• Lock-out the workers: Stop workers from coming to work or get paid. Used to counter work to rule and go slow strategies.
• Institute a pay freeze: Used if employees are refusing to follow new rules, practices or operate new machinery.

Worker participation:

The management needs to let everyone feel that they are part of the business. This means that managers will let workers participate in business decisions. There are several ways of doing this:

• Worker directors: Some workers become directors, but they are not allowed to attend all board meetings.
• Works councils: These are where representatives of employees get together and discuss matters that affect employees with managers. Works councils are called European committees in Europe, and are becoming more common there. Multinationals with more than 1000 workers or 100 workers per branch will have to create a works council and will have to always consult it when making decisions affecting employees.
• Quality circles: This is often used in Japanese companies, where workers regularly debate on how to improve quality and efficiency.
  
• Using a democratic style of leadership: Workers are delegated tasks and are consulted in business decisions.
  

Advantages of worker participation

• It increases the flow of information and improve relationshipsbetween the employer and the employee.
• It increases motivation.
• It increases job satisfaction.
• It benefits the company since it can use knowledge from experiencedworkers.

Disadvantages of worker participation

• It is time consuming.
• Workers may lack necessary technical knowledge.
• If representation is done via trade unions, non union members won't be affected.
• There could be conflict of interests.

Recruitment, Training, and human resources

The work of the Human Resources department


 
We all know that recruitment and selection is one of the tasks that the HR department fulfills. The other tasks will be discussed below:

• Recruitment and selection: Involves selecting and attracting the best workers.
• Wages and salaries: Must be enough to motivate or attract workers.
• Industrial relations: There must be effective communication between departments.
• Training programmes: Must meet the training needs of employees and accomplish business objectives.
• Health and safety: Must do things according to the law.
• Redundancy and dismissal: Must obey all laws when firing workers.

Recruitment and selection
Workers are needed when a business starts up, expands or an existing employee leaves. Businesses use the recruitment process to successfully employ the right people. This process is usually undertaken by the HR department, but in small business, HR departments do not exist since the businesses employ too little workers for it to be of much use. Here is a diagram summarising the recruitment process:

1. Vacancy arises.
2. A job analysis is done, which identifies the responsibilities and tasks of the job.
3. A job description lists that responsibilities and tasks to the candidates who apply for the position.
4. A job specification outlines the required qualifications, expertise and experience a candidate needs so that they can be accepted.
5. The job is advertised in the appropriate media. (e.g. newspapers)
6. Candidates fill out application forms, which are short-listed so that only the best candidates remain.
7. Interviews are held with remaining candidates, and the ones suitable for the job are selected.
8. Vacancy filled.

The recruitment process
Job analysis and description:
When a new employee is needed, a job analysis needs to be taken to identify the tasks and responsibilities of the position. This should be easy for a job that needs replacement, but not so much for a job that has just been created.
Once all the details of the job has been gathered, a job description needs to be drawn up. This job description has several functions:

• Given to candidates so they will know what the job will involve.
• Allows a job specification to be drawn up which will state the requirements for the job.
• Shows whether an employee carries out the job effectively or not. It helps solve disputes between employees and employers about wages, working hours, etc.

The job description for any business will usually contain:

• The title of the job.
• The department one will work in.
• Who will be in charge of the job-holder.
• Who the job-holder will be in charge for. 
• The purpose of the job (job summary).
• The main duties of the job.

Job description sometimes contain information about:

• The conditions of employment – working hours, wages, pension schemes.
• Training that will be offered.
• Opportunities of promotion.

Job specification
After the job description has been drawn up, the qualifications for the job can be identified. They usually include:

• The level of educational qualifications.
• The amount and type of experience.
• Special skills, talents or knowledge.
• Personal characteristics. (e.g. type of personality)

Advertising the vacancy
The next stage is on how to get people to know that you have a job to be filled.
Internal recruitment
The vacancy can be filled by an employee already in the business. It might be suitable for employees seeking promotion.
Pros of internal recruitment:

• Saves time and money.
• The candidates' reliability, ability and potential are already known.
• The candidates know the expectations and rules of the company.
• Motivates other employees to work harder to get promoted too.

Cons of internal recruitment

• No new ideas or experience come into the business. 
• May create jealousy and rivalry between existing employees.

External recruitment
Most vacancies are filled with external recruitment, which always involves advertising the vacancy. Here are some suitable media of advertising:

• Local newspaper: Usually for office and manual workers. These people are plenty since the job does not require too much skill.
• National newspaper: Used to find workers for senior positions that requires a lot of skills. It can be read by people anywhere in the country or overseas.
• Specialist magazines: Used for particular technical specialists such as physicists. Can be used to hire people in the home country or abroad.
• Recruitment agencies: Keeps details of qualified people, and will send the suitable applicants to interviews when a business asks for a worker. Many businesses prefer to use recruitment agencies to find them workers because it is easier. However, it is expensive since their fee is based on a percentage of the workers pay.
• Government job centres: Place where businesses can advertise their vacancies. These vacancies are usually for unskilled or semi-skilledworkers.

Possible effects of government legislation on the recruitment process
Many governments pass laws to create equal employee
opportunities. They state that all employees should be treated equally in the work place and receive the same salary for doing the same job. People of any sex and people with disabilities are treated equally. Therefore, businesses need to be careful when advertising and treating their employees because they could be prosecuted and fined.

Job advertisement
This is what a business needs to decide when drawing up an advertisement:

• What should be included.
  • Job description
  • Job specification
• Where the ad will be placed.
  • (depends on job)
• Advertising budget.
  • (depends on job)

Applications forms and CVs/résumés
When a person applies for a job, he will have to fill out an application form, or write an application letter with a CV enclosed. CVs are descriptions about one's qualifications and skills in a set format. 
Businesses will use application forms and CVs to see whether an applicant match the job specifications or not. The closest matching applicants are invited to interviews in the selection stage. A short-list is drawn up. 
These are what CVs should contain:

• Name
• Address
• Telephone Number
• Date of Birth
• Nationality
• Education and qualifications
• Work experience
• Positions of responsibility
• Interests
• Names and addresses of references.

The letter of application should contain briefly:

• Why the applicant wants the job.
• Why the applicant feels he/she would be suitable.

Applicant forms ask for the same information as the application letter and CV, but may ask for other types of information.
Interviews
Applicants who are invited to interviews will have provided the names and addresses of their references. These people can give their opinions on the reliability, honesty and skills of the applicants and they will be likely to tell the truth because the applicants will not know what they have said. 
Interviews are the most popular form of selection. However, interviews are not always the most reliable process of selection. They aim to find out these things:

• The applicant's ability to do the job.
• Personal qualities that are advantageous and disadvantageous.
• General characteristics – whether they can "fit in"?

These are the likely questions in an interview:

• Why have you applied for the job?
• What do you know about this company?
• What qualities do you have to offer the company?
• What ambitions do you have?
• What are your hobbies and interests?
• Do you have any questions to ask us?

Interviews can be one-to-one, two-to-one, or a panel of people to interview people which is used to select people for important jobs. Some businesses include tests in their selection.

• Skill tests: To test the skills of the candidates.
• Aptitude tests: To test how easily candidates can be trained/learn new things.
• Personality tests: To test for people who have specific personal qualities which will fit into jobs – e.g. that has a lot of stress; requires you to work with a team.
• Group situation tests: To test how well applicants work with other people.

Rejecting unsuccessful applicants
When applicants fail to get the job, they should be informed and thanked for applying.
Training
Training is often needed to do achieve the needs listed below. These needs can be long-term or short-term.

• Introduce a new process or equipment.
• Improve efficiency.
• Decrease supervision needed.
• Improve the opportunity for internal promotion.
• Decrease the chance of accidents

Employees should know the benefits of training for them to take it seriously. Here are some objectives of training:

• Increase skills.
• Increase knowledge.
• Change attitude, raise awareness.

There are three main types of training:

• Induction training:
  • Introducing a new
    employee to their business/management/co-workers/facilities.
  • Lasts one to several
    days.
• On-the-job training:
  • Employees are trained by watching
    professionals do a job.
  • Only suitable for unskilled and semi-skilled jobs.
  • Cuts travel
    costs.
  • The trainee may do
    some
    work.
  • The trainer's productiveness is decreased because he has to show things to the trainee.
  • The trainer's bad
    habits can be passed to the trainee.
• Off-the-job training: 
  • Workers go to another place for training (e.g. school).
  • Methods are varied and usually more complex.
  • Usually classroom training.
  • Employees still work during the day.
  • Employees can learn many skills.

Workforce planning
A business will need to forecast the type and number of employees needed in the future. This depends on the firm's growth and objectives. The forecast can be done by:

• Finding out the skills of all current employees.
• Counting out people who are leaving soon (e.g. retirement).
• Talk to staff about who would want to retrain for new jobs.
• Provide a recruitment plan. (how many new staff are needed, and how they should be recruited, internal or external)

Dismissal and Redundancy
There are some situations when businesses need to reduce the number of employees they have. This can be done in two ways:

• Dismissal:
  • A worker is fired for unsatisfactory work or behaviour.
  • Fault of the employee.
• Redundancy:
  • Employees are no longer needed.
  • Not the fault of the employee.
  • Some reasons are:
    • A business is closing down a factory.
    • A business wants to cut costs by reducing the number of employees.
    • A business has merged/taken over another and there are too many staff in certain departments.
    • New machinery replaces workers.
  • Employees are given some money to compensate for their lost job.
    • The money is often negotiated with trade unions.
    • Some government have laws that makes businesses pay for their workers this way.
  • If only some employees are to be made redundant, trade unions will agree with the fairest way to see who goes. These terms are negotiated with the HR department.
    • Sometimes there will be voluntary redundancyby members.
      • Older workers.
      • There may be some who wants to leave because they have other ideas.