What Does Industrial Plant Management Involve

Today, more than ever before the nation and most of its institutions are facing one problem or the other that have proved insoluble and rather intractable. the political system is unstable, the industries are struggling for survival, we find it difficult to uphold and practice justice, we are being unfair in our dealings, our industry output is poor, electric supply is epileptic, there is rarely any industry that can produce at half capacity, the Naira is almost worthless that one can safely conclude that the economy is witnessing a depression. The per capital income which rose to $1000 in 1988 is now reckoned to be less than $400. Nigeria as a country has receded from being classified as a middle income country in the world table to being one of the 20 poorest countries in the world. Taking the economy as a whole the situation has being characterized by chronic under performance - a classic case of economic depression.

This paper will be a mix theory and practice. In the course of our discussion, attempt will be made to define management( the bedrock of the topic) and its components. What industry is shall be examined. The issue of depression in an economy. How management can help find solution to a depressed economy.

What is management?

Management as a subject has many parts depending on what part you intend to look at and concentrate. It has been so many things to many men. As a result of which so many people have given so many definitions all saying almost the same thing. It is likened to that old Hindu legend of the six blind men who went to "see" an elephant. One felt the elephant leg and declared the elephant was like a tree. The second passed his hand along the flank, and declared that the elephant was like a wall.The third pulled on the tail and declared that the elephant was like a rope. The fourth encountered the squirming trunk, and declared the elephant was a snake. The fifth felt the ear and declared and declared the elephant was like a fan. The sixth took the tusk between his hands and declared that the elephant was like a spare. So it is with management. It has many sides.

Niccolo Machiavelli in the 15th century with a unique theory which dwelt on four types of management, showing how the "prince" or leader could meet his obligations.

First, through cohesiveness, second by acquiring the consent of the ruled, thirdly, by maintaining his leadership qualities, the fourth toughness.

The concept of scientific management was introduced by Fredrick Tailor after the industrial revolution. Tailor introduced the concept of mean getting and training the right person for the right job. This technique is still practiced by some organizations today.

Henry Fayol, developed a top management theory. He proclaimed five functions of Administrative management; planning, organizing, commanding, co-ordinating and controlling. It was from him that the world learned that for any action whatsoever, an employee should receive orders from one superior only. Fayol's principles met with criticism and repudiation on the grounds that he perceived his "employees" as a "mindless robot" lacking or incapable of exercising initiative.

There was Max Weber"s famous bureaucracy theory. One of its shortcomings is, however, the tendency for initiative to get stifled.

There was the Human Relations Movement Spearheaded by Elton Mayo who built the performance of the employee on his state of mind and body and not on the idea which would alienate him from emotional attributes as hitherto expressed by Taloy and Fayol. Elton Mayo introduced rest periods and shifts into long working hours and got satisfactory production results. He identified certain characteristics which induced better performance, work pacing, recognizing and appreciating "workers" contribution to production, social interaction within groups, discussing publicly complaints among workers and changing working environment occasionally to offset boredom. He concluded that the fact that the employee was seen as an individual, not an addition to the machine provided the key to his effectiveness.

MacGregor's X and Y theories are worth looking at. He believed that the previous postulations on management's perception of people were old fashioned, because these failed to take cognizance of people's educational and psychological development on the job.

X's management's perception of the average man was unflattering. It saw the workers as someone who disliked work, was to be "pushed", "controlled", "directed" and therefore threatened with disciplinary action, if objectives were to be achieved.

Y's theory on the other hand was flattering because the worker was perceived as expanding his physical and mental abilities naturally, did not need to be coerced, was purpose-oriented, learned, committed his time to the realization of objectives, had initiatives, was creative, and expected to be rewarded for his efforts.

Some other people also see management as a bogyman who can make or break workers' hopes and aspirations; the management hardly appreciates or commends good work but only looks out for faults, there is the belief that the people make the money, while management spends it on themselves, which gives rise to the reference of "them" and "us". We also have the total quality concept of management. Quality is a word used to mean luxury, goodness, precision or excellent finish in a product.This word quality is now used in the direction of performance. Hence quality(performance) becomes a variable which we constantly improve upon. There are two types of qualities now, one with small q, the other with capital Q, one is for quality control the other is for quality improvement or performance. We have q(quality control) + Q(performance) = TQ(Total quality).

Total quality is about how the control acts of an organization work together to achieve better results. This involves satisfying customers, a continuous improvement of performance, eliminating waste and excesses, and enhancing the contributions of workers for the good of the whole.

What we have done so far is the review of management theories and techniques which has been postulated in human organizations over the years.

Management therefore is concerned with the accomplishment of objectives through the efforts of other people. Objectives or goals are the final results expected. It is the act of getting things done through people. It is the ability to properly mobilize human resources towards continuous improvement in performance, through the offer of attractive incentives, with the ultimate aim of achieving desirable results. The ultimate objective of management is to engineer the progress of the society by ensuring first, the highest level of happiness for the largest number of citizens and second for the more rapid growth of society.

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Microsoft Management

Bill Gates and the management of Microsoft are synonymous. Gates founded the corporation and the Microsoft management philosophy that he implemented, as well as the Microsoft corporate strategy, helped the company become the the global leader in personal computer software and systems.

The Microsoft business structure is vast and over 71,000 people are employed in 103 countries and regions. The Microsoft leadership style was established by Gates himself and CEO Steve Ballmer, and both have been responsible for Microsoft planning strategy.

Microsoft's Mission

To enable people and businesses throughout the world to realize their full potential.

Microsoft's Vision

Empowering people through great software — any time, any place, and on any device.

Delivering Microsoft Mission

The tenets central to accomplishing Microsoft mission include :

Broad Customer Connection
Connecting with customers, understanding their needs and how they use technology, and providing value through information and support to help them realize their potential.

A Global, Inclusive Approach
Thinking and acting globally, enabling a multicultural workforce that generates innovative decision-making for a diverse universe of customers and partners, innovating to lower the costs of technology, and showing leadership in supporting the communities in which we work and live.

Excellence
In everything we do.

Trustworthy Computing
Deepening customer trust through the quality of our products and services, our responsiveness and accountability, and our predictability in everything we do.

Innovative and Responsible Platform Leadership
Expanding platform innovation, benefits, and opportunities for customers and partners; openness in discussing our future directions; getting feedback; and working with others to ensure that their products and our platforms work well together.

Enabling People to Do New Things
Broadening choices for customers by identifying new areas of business; incubating new products; integrating new customer scenarios into existing businesses; exploring acquisitions of key talent and experience; and integrating more deeply with new and existing partners.

To read more about Microsoft's corporate strategy and Microsoft quality management, click on the articles listed below.

1. SWOT: Assess the strengths, weaknesses, opportunities and threats of your business with SWOT Analysis
   
2. Information Technology : New Business Opportunities

[ Source1 ] [ Source2 ]

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Business Management Style

Even severe critics of Arnold Weinstock (and they were plentiful) must grieve at the circumstances of his passing - with a once-great fortune decimated by the near-destruction of his once-great company. It's a Greek tragedy of management: and as in all Greek tragedy, its negative elements carry powerful, positive morals.

The positive side of Weinstock's legacy extends far beyond the old GEC money machine which became the new Marconi bottomless pit. The young Weinstock was first of all young: he showed that new and radically-minded people were capable of shaking up the mausoleums of British management. He also showed how: by replacing wasteful overheads with tight controls that forced the managers of intelligently separated businesses to manage effectively.

The basic Weinstock methods have become all but universal, though often honoured as much in the breach as the observance. At the start his ideas were revolutionary (in Britain, though not the US). He gathered all cash into the centre: budgets became key growth mechanisms, testing managers harshly, not by improvement over past performance, but against their forecasts of future deeds. GEC budget meetings became famous (or infamous, according to taste) for the caustic inquisitions with which Weinstock withered the unfortunate.

The first critics, especially in the management mausoleums, regarded this new-fangled pressure as positively un-British. The gainsayers were swamped by the results: to immense City approval, Weinstock showed that ruthless, cost-averse management, holding managers to tough targets and key financial ratios, delivered in bucketfuls what is now known as 'shareholder value'. Alas: hindsight shows that the seeds of later decline were already being sown in that wonderful early success.

First, too much came to revolve round the central figure. Weinstock's first finance director, Sir Kenneth Bond, was an important partner. But the central apparat at GEC's relatively Spartan, small HQ took on the nature of a court. Weinstock's inquisitions and equally abrasive phone calls only strengthened this monarchical aspect. Managers often ran scared, and Weinstock's emergence, after two vast takeovers, as the emperor of all UK electrical engineering crowned his eminence.

The dilemma is general to chief executives, even those (which means most of them) weaker in mind and personality than the brilliant Weinstock. His theory of management hinged rightly on decentralization, leaving managers fully and freely responsible for delivering the goods and the goodies. But the big boss inevitably sets the style. The greater the success, the more potent this unseen but powerfully pervasive top-down influence. Awaiting those sharp phone calls from Stanhope Gate, allegedly deskbound GEC managers buckled down to making their numbers - and that, too, eventually undermined the Weinstock magic.

Back in the 1960s, defending himself against charges of over-emphasising profits, Weinstock averred that profit was not an objective, but a result - the result of doing things properly. This telling aphorisim is unarguable. So in the 1990s I was disconcerted to hear him declare that profit was all that mattered. The distance between Weinstock I and Weinstock II helps explain the changing reputation of GEC and its creator. His companies did many things properly: but were they the truly important things?

A tough financial regime, geared to profits, and applied through merciless inquisition, discourages risk. It's no sin to be risk-averse: the great manager, of course, seeks dead certs. The sin, though, is to miss opportunity. Weinstock's empire straddled the technologies and markets of latter century super-growth. Where companies like Nokia, Intel and Dell flourished, GEC had footholds, beachheads and even (as in telephony) large occupied territories. But its managers, whether or not they perceived these golden opportunities, seemingly lacked the appropriate motivation. The various financial targets were met, the cash mountain piled up, but the chances were all lost.

What you measure in management, by and large, is what you get. The financial conservatism that gave GEC so much strength could have been a platform for risk-taking opportunism. Companies badly need both virtues. But as negative forces worked through, GEC entered a new and troubling zone. Andy Grove, the chairman of Intel, has tellingly described the 'strategic inflection point' when revolutionary technologies (like his own microprocessors) radically change an entire industry. Miss that point, and the company dies. But that's only one way in which corporations can pass a point of no return.

The old GEC was a classic diversified conglomerate. Here financial controls link unrelated businesses whose preferred characteristics are established and protected markets, captive customers, cost-plus contracts, stable technologies and high margins. Even the similar ABB, with a far more dynamic record than GEC, has run into the same roadblock. Markets, customers and technologies are up for grabs in a fiercely competitive world where cost-plus plums and fat margins are dreams of yesteryear. Weinstock's successors were thus right on one vital matter: GEC needed reinvention.

Unfortunately, they moved from Safety First to something perilously close to Safety Last. Weinstock's defence and other babies were thrown out with the bathwater. But Weinstock wasn't blameless. He hung on too long. Super-bosses should be held to the same statutory retirement as anybody else. Supposedly, Weinstock was partly motivated by a wish (not shared by all others) for his son Simon to succeed. The latter's tragic death removed that possibility. But the whole approach offended against another golden management rule: never let powerful bosses have the decisive voice in appointing the succession.

Source : here

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Strategic Planning - The Present and The Future

Any managements which don’t find the present day challenging must be either very lucky or completely comatose. It doesn’t matter whether the business is a long-term, high-tech growth star, like Finland’s Nokia, or a solid, stolid retail empire, like Britain’s Marks & Spencer. Get your present-day strategy wrong, and retribution, as in those and many other cases, is swift to follow. The marketplace, the media, and the financial markets turn on former heroes with a vengeance – and this reaction, of course, only intensifies the pressure on those who have lost their way.

Note that these observations apply to present-day strategy - how companies are managing in the here and now, and never mind the problematical future. But if managements are unable to meet the challenges that surround them now, tangible and visible, they can’t offer much hope of surmounting the much harder challenges of the future. The future, remember, cannot be known. You can make intelligent predictions. But you don’t know whether they really are intelligent until much later - which will often be too late to avert catastrophe.


NOWHERE TO HIDE

Thus Nokia can’t be excused for missing the threat posed by the union of Sony and Siemens in mobile phones, or the possibility of a resurgence of its major Scandinavian rival, Ericsson. Nor can M&S hide from its culpability in missing the challenge created by its customers and competitors as the former responded to faster-moving fashions and more stimulating formats - the creations of newer and fresher minds and eyes that the old champion could deploy.

Yet both companies can be forgiven in theory (they won’t be forgiven in practice) if their vision of the year 2014 proves to be hopelessly wrong. The decisive phenomenon of the present-day is the revolution in information and communications technology (ICT). The digital onrush has created an entire new economy which impacts on the old economy at every turn. But the significance of the World Wide Web couldn’t be surmised until it existed, and even then the correct response to this marvel was evidently difficult to devise. The dot.com bust wasn’t a failure of the technology or the systems, but a result of profound misunderstanding and crass mismanagement.

The challenge for managers is therefore to manage the present better - much better - as preparation for the unforeseeable. Companies have no option but to live by the old Boy Scout maxim, Be Prepared. And that is what ties present and future together.

After correctly recognising and interpreting what is happening now, inside and outside the firm, you can at least ensure that the present nature and standards of management are appropriate and effective.

That’s the foundation on which you build the future - not on forecasts of the future as a whole, but on ideas strong enough to create your very own future. Nokia, as it happens, is a rightly famous example of doing precisely that - throwing away the entire contents of a ragbag of businesses to concentrate on the one market where it had the chance of developing real competitive edge. Its continuous stream of innovations both stimulated and satisfied demand. In doing both, Nokia closed the gap between the dreary present it knew and the golden future which it wished to achieve.

CREATING YOUR FUTURE

Closing the gap, however, applies to other key aspects of today’s management challenge. To create your own future, you have to close the gap between generating ideas and achieving results: and that also means closing the large gap between the typical organisation’s current behaviours and those that foster ideation. And that is something that the typical manager finds difficult - and shouldn’t.

Here, for example, are what I diagnosed as ten prime attributes of a critical Nokia supplier: ARM, designer of 75% of the silicon chips used in mobile phones. ARM’s attributes offer further penetrating insights into the 21st century ‘Ideas Company’.

1. Get the business model right – and keep it that way
2. Make the customers into real and treasured partners in the business
3. Honour and reward the innovators
4. Foster - and never lose - a desire to survive and succeed
5. Develop new ideas to attack new markets
6. Give R&D its own special place in the organisation
7. Ensure a proper balance between current development and future research
8. Make sure that there’s a place and hearing for whacky and far-out thinking
9. Create closely knit teams of people at all levels of the company
10. Regard challenges as the source of the best opportunities - and take them.

Are any of those policies ones which would strain your organisation? Do you consider any of them wrong-headed, or dangerous? On the contrary, the ten are not only practical and beneficial; they constitute part of the template for the Ideas Company, the one that can create its own future.
But there’s another question: how many of the ten actually feature in the management of your workplace?

My educated and experienced guess is that very few established companies practise more than a handful of these behaviours. They may have a business model, but it will be much the same as that of the competition, providing no useful edge, let alone a transcendent one.

GROWN-UP START-UP

True, ARM is a grown-up, high-tech start-up that doesn’t have the historical lumber or organisational deadweight that hamper businesses of greater age and slower-moving technology and markets. But weren’t the gee-whiz digital growth stars supposed to become the models for the 21st century company? Of course, many stars were nothing like what they were cracked up to be. But their speed of reaction and innovation was and is real enough. And that speed is in itself armour against the unexpected: i.e., the future

For a complete contrast, I visited a company that is about as far from ARM as you could find. It is old-established (1876), sells a very traditional product (English ale), and is largely confined to one area, the East of England(whose Development Agency commissioned my three studies). ARM is a public company that has been riding the high-tech seesaw. The brewer, Charles Wells, is private and family owned. As for the future, not long ago it didn’t seem to have one: giants were mopping up the independents.

So what behaviours had kept the company thriving and growing?

1. Base new development on a foundation of lasting and relevant virtues.
2. Make continuous improvement over time the basis for radical change.
3. Build the brand – manage both the corporate brand and the products.
4. Be old-fashioned about good financial house-keeping and strategic prudence
5. Be innovatory about everything else, with new projects at all levels and in all activities.
6. Don’t insist on being first – but insist on being best.
7. Be very patient but extremely determined in breaking new ground.
8. Keep close to the customers and develop new ideas around satisfying their needs.
9. Involve staff fully in the company’s strategy and its progress.
10. Have a unifying and bold ambition to which everybody can respond.

The difference in flavour between ARM and Wells is evident - as you would expect, given the differences in their markets, products, ownership and history. That expectation is in itself an important point. My recent book, The Fusion Manager, made this point most emphatically - that there is no one right answer, only the best answer you can produce at the right time.

Neither of these two companies is run by theorists, but both are essentially pragmatic. They follow the philosophy of a stock market professional I once knew: he never acted on predictions, but only followed ‘money on the table’ - the amount of cash investors were actually placing on their bets.

THE PERFECT COMPANY

That doesn’t sound very clever, but it made him exceedingly rich. Yet there is a valuable place for theory and experiment. At HFL, my third subject, the astonishing aim is to create ‘The Perfect Company’.

This is, of course, impossible, since perfection is not given to man. But the pursuit of perfection is eminently feasible, hard to better as an animating, driving force.

The bedrock of HFL’s business is bio analysis, primarily testing racehorse and greyhound samples to check that no illegal substances have been used to enhance the animal’s performance. Since scientific perfection is within reach, the work is a good match for HFL’s ceaseless and many-sided search for perfect corporate performance. The ten key principles I found there are vigorous and vital.

1. Set all targets and ambitions at the highest feasible pitch.
2. Use every available channel of communication, and invent ones of your own.
3. Make voluntary activity a critical element of the ideas organisation.
4. Use IT as a positive means of storing and exchanging ideas.
5. Lead from the top, but to animate and facilitate rather than command and control.
6. Relate all innovatory activities to the strategy and the economic performance of the business.
7. Look for new ideas in management and people policies, not only in products and processes.
8. Use informal methods to reinforce the formal elements of the organisation
9. Never be shy about ‘creative swiping’
10. Invest in people’s personal as well as their professional development.



Source : here
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Business Strategy - The Conventional Unwisdom

The conventional unwisdom rules management. Read almost any management book, attend almost any management seminar, and your head will be filled with preaching that almost nobody practises. For instance, however much managers are advised (as by Thinking Managers) to practise people-based management, the reality is that people are widely treated as expendable. Far more companies have downsized - following the supposed conventional wisdom - than have created systems for exploiting fully the talents and initiatives of everybody in the organisation, from bottom to top.

One explanation lies in the evolutionary psychology described last month. As human beings evolved, bold mavericks had less chance of survival than cautious folk who stuck with the herd. Natural instinct drives managers and other employees to play 'follow the leader' and to avoid the insecure unknown in favour of the supposedly safer status quo. Yet business history abounds with examples of leaders who have dragged companies down to the depths, largely by trying to preserve a status quo that was fast disappearing.


One classic case is Digital Equipment, whose founder, Ken Olsen, was once hailed as America's greatest entrepreneur. Having built his brilliant success on mini-computers, Olsen never adapted to the age of the microprocessor. His conservatism infected the whole organisation. By the time the board evicted the founder, Digital's lack of a strong PC business, and of a fast-moving management ethos, condemned it to a series of uphill struggles that led only into the arms of Compaq - which, only a few years back, was a fraction of Digital's size.


EXCELLENT BUSINESSES

Half the companies, more impressively, clocked up performances above the doubling-every-five-years level. But the super-stars in these rankings created genuine shareholder value by building excellent businesses. The unprecedented flood of wealth created for Microsoft's stockholders flowed from the equally unexampled success of Bill Gates in protecting, extending and exploiting his worldwide near-monopoly in PC operating systems.

Much the same story holds for Dell, Intel, Oracle and Compaq, which flourished as Digital and Wang faded. In their industry, unconventional wisdom is the breath of life. Winners seek unorthodox solutions by methods which are often just as experimental. They are fully aware that placing shareholder value first puts the cart firmly before the horse and enshrines a monumental piece of the conventional unwisdom - that, so long as the share price is fine, so is the company.

The problem is partly that the conventional unwisdom provides such pat and convenient answers. But none of the neatly quantifiable financial measures that primarily influence share prices actually tells you much about the quality of management. Return on capital, gross profit margins, growth in earnings per share, etc. say nothing about competitive strength, employee morale, customer satisfaction, innovation, productivity, quality, or any other attributes of excellence.

This isn't only a question of external ignorance. Many managers have no meaningful measures for any of the seven attributes listed above - let alone all of them. On the contrary, conventionally run companies follow policies that retard and even prevent real progress:

1. They deliver products and customer service that are well below the best possible standards.
2. They tackle problems and business areas one by one, not as part of overall plans that encompass everything.
3. They cannot give clear answers to a key question: Who's in charge here?
4. They lose money on activities that give no customer benefit, but they underspend on activities that do the opposite.
5. They undermanage or mismanage their finances.
6. They neither identify nor meet the critical points of customer satisfaction.
7. They stress and reward individual performance, not teamwork.
8. They don't follow through on improvement to make it continuous.
9. They don't make top-class recruitment and personal development the keystones of policy.
10. They operate ineffective and inadequate communication systems.
11. They don't tell people clearly what is expected of them.
12. They don't measure the right things in the right way - like the aforementioned competitive strength, employee morale, innovation, customer satisfaction, productivity, or quality.

Most important of all, the conventional company doesn't use such measures as driving forces for better performance. The Dozen Deadly Sins are no invention. They were all found, alive and kicking, at Continental Airlines by Gordon Bethune. As chief executive, he turned the company, in the words of his book title, From Worst to First (Wiley). His formula was the exact opposite of the Deadly Dozen - reversing which is a superb guide to corporate elevation.


MULTIPLE COMMUNICATION

On communication, for example, Bethune's management uses 'as many ways as possible - from newsletters to daily updates on bulletin boards to e-mail, voice mail and electronic signs all over our workplaces worldwide...If we know it, they know it'. Bethune even claims that 'if an employee doesn't know what's up at work, what the goals are, what's expected, what's happening, it's his or her own fault...they'd actually have to work not to know what's up'.

He also stresses that 'we listen as well as talk'. Now, all such claims have to be regarded suspiciously until proven true, not only for the benefit of outsiders, but for insiders themselves. There's no substitute for an intelligently conducted survey that will confirm or correct managers' own impressions. Bethune is less likely to be misled than most managers, however, because the circumstances of his programme drew management and other employees closely together - as usual with turnarounds from imminent catastrophe.

The abnormal conditions of crisis generally expose the conventional wisdom as dangerously, suicidally unwise. But why wait for crisis before starting to manage wisely? What are managers taught that drives them to unwisdom of the type described by the Dozen Deadly Sins? The prime suspect is 'making the numbers'. Holding executives responsible for hitting their financial targets sounds eminently reasonable. It's too easy a jump from that reasonable insistence to the unreasonable conclusion that failure to make those magic numbers warrants dismissal.



NO FAULT OF THEIR OWN

The dismissal won't even encourage the others, since they know that one of them will come bottom next time round, very possibly through no fault of his or her own. As for the missed quarters, the unconventionally wise manager is more interested in the reasons than the results. What are the possible explanations?

1. The targets were originally set too high.
2. Changed circumstances meant that the targets became unrealistic.
3. The sales person underperformed for ascertainable reasons.
4. He or she was not fully and properly trained and/or briefed.
5. The sales person should never have been appointed in the first place.

Whatever the explanation, the alternatives all point the finger at management. Why were the targets set too high? Was it because (see Wang) of major strategic error that vitiated all sales efforts? Did the changed circumstances (see Wang again) arise from competitive actions that the company had failed to match? Was the salesman suffering acute personal difficulties that front-line management had ignored? More often than not, the answers will indicate management defects that need urgent correction - but none of which will be cured, or even minutely improved, by firing the 'failed' salesperson.

Punitive action, however, fits the conventionally unwise mindset. Managers 'know' that being tough on perceived failure raises performance. They are proud of their business knowledge and intuitive powers. That makes it very hard for them to accept a demonstrable truth: that neither knowledge nor judgment are any substitute for specific analysis of the facts (as above). The latter may, in fact, wholly contradict the intuitive, case-hardened approach.

Thus, the managers of one health products company, trying to lift sales of surgical trays, considered seven options. The favoured suggestion was to customise the trays to each buyer's requests. It proved to be the worst option. The effect was markedly negative - sales would actually have fallen. The company had no choice but to shelve its customising plans. Thus does the unconventional wisdom in turn become unwise. When gurus started to preach the case for placing customer delight first and working backwards from that excellent ambition, the advice led, in best practice, to radical reorientation of the value chain.



LEADING TO CHANGE

The unconventionally wise approach here was to set aside instinctive, intuitive ideas while subjecting all options to rational study. Why would any sane manager ever do otherwise? Yet time and again analytical findings which overturn preconceptions are treated like the messenger bearing bad news - though the news may be excellent. A truth that leads to lower costs and higher profits is hardly painful. It will, however, lead to change, which often seems disagreeably arduous. That health care company, for instance, obviously needed to reform its compensation and training policies across the board, not just in surgical trays - and further analytical management was required for the change.

Take those holiday incentives. Typically they come into their own in the final quarter. The conventional theory is that the cut-off stimulates greater effort, which pays off in the sales boom needed to 'make the numbers' for the year. This process quickly decays into a ritual, with managers coming to rely on the fourth quarter surge. The analyst, however, asks: If this level of performance was attainable, why hadn't it been achieved in the previous nine months? Why does the sales force only respond to special incentives, and not to their normal pay and conditions?

In most cases, the superhuman efforts in the last quarter are followed by slackening sales in the next - with the consequence that the company must play catch-up for the rest of the year, culminating in the fourth quarter stampede. There's a way out of this potentially vicious circle. Calendar and fiscal years are meaningless in management terms. Yet managers persist in behaving as if something meaningful ends on 31st December or 31st March, or whenever. Rolling 12-month budgets, with a new quarter tacked on as another ends, provide a much more realistic, flexible and continuous basis for accounting and control. The forecasts get revised every three months in the light of actual experience. Reward systems also become more intelligent.

If incentives, bonuses and commissions are tied to 12-month performance on this rolling basis, several inconsistencies will automatically disappear - and so should the fourth quarter stampede. The reform has one drawback: it flies in the face of the conventional unwisdom. But doing precisely that is the way to become uncommonly wise - and successful.

Source : here
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Integrated Risk Management

Here is the current reality there is a phenomenon to be studied. When prices of Avtur rise, two airline operator immediately reduce the number of flight and destination of Yogyakarta. However, there are other airlines that action as will increase the number of flights to and from Yogyakarta. For the first two operators, the increase price of Avtur was arrested as a threat, while an airline operator interpret this as another opportunity. A valuable lesson that risk, uncertainty, and losses are three different things, the same can not reconcile it.

Many people are wrong, the risks are considered together with business and financial risks are considered together with the loss. In the financial risk is only one component of the risk business, in addition to the risk of the project, operational risk, market risk and risk associated with the regulations.

Risk in the event of a substance that has a negative impact on the company's goals and strategy. Integrated risk management is a process where the risk is identified, measured and manageable throughout the organization. The possibility of the risk and consequences of the business are two fundamental things to identified and measured. Through integrated management of risk, every strategic decision taken on the basis of the information is always valid and reliable. Thus, the decision is expected to be able to effectively anticipate the events in the future and reduce uncertainty.


Ironically, the frequent risk management focused only on the risks associated with operational activities, which is then converted into units of money (financial risk). This approach is certainly less complete, because not covering overall risk inherent in the business. Indeed, every industry has its own emphasis on risk will controlled. In integrated management of risk, the risk of a dominant as the main reference. For example, in the financial industry and banking, risk management more on the financial aspects without ignoring other aspects of risk.

The next question is how to technical integrated risk management? In fact, the process began from analysis to accurately both internal and external environment the company. Results of analysis and then followed up with the identification and classification are clear, specific, comprehensive and each of the risk that, from the aspects of operational, market, financial, project, and regulations. One of the ways that are often done through the identification question is what, when, where, why, how associated with the emerging trend of risk. Of course, this process is not quite done tembak only once only. The complete data collected in the identification process, this will further facilitate the search for solutions for each of the risks that arise.

However, only identification is not enough. Many companies can do well with the identification of risk is the risk that know what will be faced in business activity, but one of anticipation in doing. Why? Not infrequently in determining disability would start from where the resolution of the problems that arise cause despair. Therefore it is necessary to the process of analysis and evaluation. This process helps to understand the potential risks with the impact of any future risk if true, and to determine whether a risk can be accepted or not.

The problems that often appear in determining priority is the handling and determination of the limit of tolerance when terebut risk can not be managed entirely. Limit of tolerance will determine how much of a risk can be accepted (Acceptable). Here, policy and management of the company's leadership role in decision making. Of course it is not enough merely rely on gut feeling as related to the achievement of the target company. In the risk management business, management companies are some options: avoid risk, reduce risk, or transfer the identified risks will appear.

For the type of risk that potential high-impact and large, the options that can be taken is to avoid the risk. This means that the company's management determined that the company will avoid any activity that is high risk. On the other hand, for the type of risk that the occurrence probability is low impact and small, management can only accept the limits of tolerance that has been set. To risk the possibility of the emergence of small but big impact, companies usually do a transfer of risk facing the other parties, such as with insurance, but the company still responsible for minimizing the potential risks.

Of course, a risk management policy must be preceded by a comprehensive analysis by considering various aspects, especially related to the cost and the benefit that will be obtained and are covered by the company. Here the functions of planning, supervision and control of policies that will be taken against a risk will be very decisive.

Actually what is a major factor in the application of risk management in an integrated organization, especially when associated with the performance of the company? Leadership can not be finished a role as a stimulus to provide direction and guidance for all members of the organization. With such commitment from the leaders (leadership commitment) is not successful in determining risk management. In addition, the risk management culture needed a strong bond as for all members of the organization that can be attached, as achieving the goal line. In the implementation, revenue from members of the organization just is not enough, more than the required depth involvement (deep Employee Involvement) members from each organization. In addition, the integration between planning and implementation is also important.

Change management, communication and learning play a role as a pillar integrated risk management. Leaders of the organization should disillusion the meaning of the crisis or even, if necessary, create a situation of crisis in relation to the importance of the implementation of risk management is done to improve the performance of the organization. In the step-by-step guide that changes needed to better not lose (set back). Clearly, the communication can not end, between the lines in the organization and in time. Keep in mind also that the communication process in risk management is carried out not only limited in the organization (inward), but also outward to partners and other relevant stakeholders.

That very important in the integrated management of risk is the aspect of control. The leader of the organization charged for serious concern in this case because of the often terlemah point in the risk management practices. Control of the well, by learning to make risk management as an integrated process with the completion of the ongoing. In return the organization's performance is improving significantly.

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Business Process Management

Climate competition demands not only goods and services of high quality but also speed service in addition to the cheap price. To achieve the standard competitive as this, the organization would not want to be inward looking to optimize business operations in each line, stabilize and improve the quality and reliability system. This includes optimization of completeness of the control of the process, the solution to long-term sustainability, not only to minimize errors but also waste treatment and back, time efficiency, and elimination of activities that do not provide added value.

Cycle of process improvement initiatives in outline is divided into three main activities, discovery and design, deploy and execute, and monitor and control. Discovery starts with identifying the needs of the process. Start from the force, the value of governance, strategy, until the results of the business organization. This will support the identification of "raison d'etre" of the process. Furthermore, identification was followed by the inventory of the process that has been running both the process and the process of the main supporters. Inventory is a snapshot of how the flow chart works, how the cost of the necessary, cycle time and others. In addition need to be, whether a process to provide value-added or not.


Categorize the results of value analysis is useful to determine the priorities in the repair process. Even, if necessary, a process that does'nt give added value since this stage can be trimmed. The only consideration should carefully before trim it. But it also means not to be at-letting process that does not bring added value is more cumbersome. Like letting the fact that the goods were not used but discarded rubbish I had to make it a burden.

The results of the inventory was followed up with further determine who is responsible for a process (process ownership). The first responsibility of the owners of this process is to inculcate the culture and sustainable improvements. With the improvement of sustainable development, defined as a standard indicator of performance parameters of the process, which includes aspects of the time, cost and quality. Criteria of this standard is made clear, measurable, and can be reached. So that the standard was based on the assessment can be made of how much the performance gap from the process during this run. Root cause analysis can be done to get what factors into pemicunya. By knowing the trigger factors of this opportunity for improvement can be identified, whether it is through the adoption of technology, improvement of management practices, work flow improvement, or the other.

The next stage is design a new model that is able to optimize the performance of the business in accordance with the characteristics that have been found. Learning from the experience of others through him with a "best practices" from the related industry will help inward looking out from the trap, reduce risk and cost and maintain the company.

Before being implemented, these new models was simulated, as the experiment of the changes that occur, how successful the improvement of the design is running. This simulation will reduce operational risks by anticipating the lack of new models. If successful, the simulation model can be implemented while monitored by the analysis and control of the results. Still in the spirit of improvement and development cycle.

Each of these stages, human resources play a role vital, both in his role as the Process Designer, Process Executor, and Process Manager. Thus, the training sustainable and implemented cross-sectoral is needed to improve their competency. Besides understanding the perception of the employee to become compulsory for the company. Pride as employees who feel valued as an asset the company should be proportional attention. Feelings of pride and this can increase Engagement employees of the company and the rope can become a very strong emotional boost to the internal motivation. Making 'enjoy' work every day and feel how the works to give added value to customers. If an employees' enjoy 'job will be to foster compliance in conducting its duties with wholeheartedly. Sincerity in serving the internal and external customers will improve the quality of service.

Of course, this customer orientation can't be overlooked in the management of the business.

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