Reliance Industries and the UK Coal Plc Stakeholder Perspective - Case Study Example

Introduction The total human capital employed worldwide stood at 6.82 million, with year-on-year growth of 1.1% (2008-2009). The total employed human capital is stipulated to reach 7.66 million by 2020 (www.ilo.org). Human capital globally works to satisfy Maslow's hierarchy of needs (1943). Majority of global workforce offer knowledge and physical intangible assets to satisfy Physical and safety needs (Maslow, 1943, pp 374). Post satisfaction of basic needs structure the human capital searches for the other three advanced needs fulfilment over a period of life cycle. Majority of human capital reaches to the level of self actualization i.e. Maslow’s (1943) finale need of hierarchy. Thus individual personnel cannot achieve all the four needs on standalone basis i.e. working as lone star in competitive 21st century dynamics (Hackman, 1986, pp 112). Individuals need to share and gain information base in diverse teams to enhance need fulfilment on long-term basis. This emphasises importance of teams in global economic environment to enhance stakeholder value. There has been focus towards managing directed teams to enhance operational efficiencies and productivity on long-term basis. Organisational structures such as hierarchical and bureaucratic focus on directed teams to improved operating margins worldwide. Majority of public institutions prefer direct chain of command or bureaucratic structure (Manz & Sims, 1994, pp 4-5). On the other hand, majority of large corporations in emerging economies has focussed on hierarchical organisation structures to improve value and volume shares and indirect enhance sustainability. Thus it could be seen from initial analysis that team dynamics is directly proportionate to national culture and business model or cycle of particular institution. The other side of directed team dynamics is self motivated employees enhancing knowledge management and sharing without managerial control (Luthans & Davis, 1979, pp 39). These cases of self directed teams could be found in advanced economies with higher work flexibility and indirect satisfaction of basic needs (physical and safety). Thus in our research note we would be emphasising on elements impacting the decision of focussing on self directed or directed team dynamics and its overall effect on stakeholder perspective. On a broader perspective the research will also highlight the development cases of self directed teams in diverse scenarios worldwide to improve validity and reliability of the study. Research Question How can self directed teams enhance operating margins on long-term basis? Case study on Reliance Industries and UK Coal Plc stakeholder perspective The sample of UK Coal Plc and Reliance Industries is selected to understand the cultural impact on the establishment of self directed and directed teams. Reliance Industries is operational into diversified business activities in emerging economy such as India while UK Coal Plc is largest coal producer in advanced economy i.e. United Kingdom. Although both businesses are into traditional businesses such as energy, oil & gas requiring highly controlled teams to enhance operational efficiencies. Background A progressive self-directed team (SDT) approach is one valuable experience for companies that may want to fast-track the empowerment of their workers and at the same time, achieve corporate goals faster (Bozeman & Feeney, 2007, pp 720-723). The SDT principle requires that people working in teams must set their own goals, timelines, self-reinforcement, constructive thought processes and other activities that can influence their own motivations and behaviours (Burns & Stalker, 1961, pp 111). SDT could be termed as goodwill substitute of leadership model in knowledge economy. Kerr and Jermier's (1997) study revealed that when substitute conditions are present, employees are effective without a formal leader using a particular participative management style. Thus if an organization has well mission and vision for particular process or overall along with well-defined performance-based reward system for its employees, then it necessarily follows that they are directed toward accomplishing the agreed target. The above two elements or core procedures i.e. well defined objective for a particular process example product development and performance based salary and incentive system example in par with industry standards then chances are there is no need for a micro-manager to supervise the work of the people on a day-to-day basis (Miles & Snow, 1992, pp 4). The other parameter where self directed teams can enhance productivity is when employees are highly skilled and experienced and your organization has a progressive career path model for everyone (Manz, 1986, pp 69-71). A very good example could be of business consultants in McKinsey where career path is well defined from research analyst-consultant-senior consultant-partner-senior partner- vice president of the business unit and domain (Manz, 1986, pp 68). In knowledge economy and competitive business environment, leadership substitutes have become more important as organizations remove line supervisors or hierarchical organisation structure and shift toward team-based structures or flat organisations (Lawler, 1992, pp 27). On long-term basis the lead time for a particular process is reduced with lower managerial structures and saves working capital. The self directed team dynamics is closely associated with Japanese strategy of sempai-kohai (senior-junior) work relationship or mentoring (Miles & Snow, 1992). This type of workplace partnership means that the most senior guy in one functional unit provides the leadership requirement by providing social and technical support to a neophyte employee (Buell, 2004, pp 72-73). On a long-term basis truly, a corporate executive becomes a true leader only if he is able to help team members learn to lead themselves through "leadership substitutes" or "self-leadership." This requires the process of influencing oneself to establish self-direction and self-motivation needed to perform a task (Osborn, 1963, pp 69). Bottom line: Thus it could be seen that properly defined mission, vision and process objectives, senior knowledgeable and experienced colleague enforcing mentorship and performance oriented reward system in par with industry standards can substitute traditional micro managerial control and hierarchical organisation structure on long-term basis. The long-term benefits as discussed above are enhanced of employee benefits (as per Maslow’s need hierarchy) and improvement of organisational efficiency and operating margins. In the next section we would be looking at the cultural impact on self directed teams for UK Coal Plc and Reliance Industries to understand the self directed team dynamics on global arena. Case Research In this section we would highlight the cultural impact on formation of leadership substitute or micro-manager oriented teams across the globe. Culture has strong impact on team dynamics due to the following: The main goal of any team is to bring together the knowledge, talent, expertise and efforts of individuals to produce better results than could be achieved by each person working alone. Culture impacts the cognitive process of bringing the right knowledge and talent at the right time and right place or process to enhance productivity or results on long-term basis. United Kingdom and Indian cultures are highly differentiated as per Hofstede’s (1980) five cultural dimensions mentioned below: United Kingdom has unemployment benefit scheme which takes care of the basic two needs i.e. physical and safety as per Maslow’s need hierarchy (1943). On the other hand, average employee is highly individual in United Kingdom as compared to India due to values, childhood upbringing etc (Hofstede, 1980, pp 124)1. On the other hand, Indian have traditionally been raised into competitive environment (population of 1.7 billion in 2009) and had educational institutions with higher process oriented than United Kingdom (flexible schooling environment fostering innovation and risk behaviour)2. Finally, higher command chain hierarchy is necessary in Indian corporate structure due to business ethics of “survival of fittest” while in United Kingdom as unemployment benefits cater to the basic needs thus employees work for accomplishing change or learning on long-term basis. In October 2009, both UK Coal Plc and Reliance Industries were offered the task to expand their coal exploration brand portfolio to enhance volume share on global basis. The brand portfolio expansion strategy was well defined along with targets, cost benefit analysis and requirements for both the companies i.e. UK Coal Plc and Reliance Industries. The reward system was to be determined by individual companies as per macro economic scenario. The requirement was: Recruitment of single brand manager to expand the equity (Marketing experience 5-7 years) Recruitment of two associate marketing executives (Marketing experience 1-2 years) Hiring of single research analyst to enhance market segmentation and brand positioning. UK Coal Plc approach UK Coal Plc hired team of three individuals with similar experience of 2-3 years in marketing and business research and standalone individual of 5-7 years in marketing. All the four candidates were hired on contract basis with flexible working hours. All four candidates were hired on high performance oriented reward system criteria as it was pilot system or new product branding process. Critical assessment: UK Coal Plc followed the Japanese sempai-kohai (senior-junior) work relationship or mentoring. On the other hand, there was wide overlap of expertise i.e. knowledge sharing work culture. Finally it could be seen that high performance oriented reward system would had motivated individuals in UK to self focus or direct towards common goal of establishing the new coal brand in global marketspace. Overall UK Coal Plc reduced working capital or liabilities (contract based employment). Lack of micro managerial control will further enhance operating efficiency and new product branding in the global competitive coal marketspace. Reliance Industries approach Reliance Industries on other hand hired as per team dynamics specifications i.e. one brand manager with 6 years of experience in marketing. On the other hand, the company hired two associate executives reporting to the brand manager with 3 years of work exposure in core B2B marketing in regional and national segments. Finally the company hired market research associate reporting to brand manager. All four personnels were hired on Reliance India Coal Limited payroll with high fixed salaries and 15% bonus on basic salary compensation plan. This could be mainly attributed to cultural impact of lower satisfaction pf physical and safety needs in non unemployment benefit oriented country such as India. The working hours were sketched from 0900-1600 hours. Critical assessment: Reliance Industries followed the traditional hierarchical organisation model or command chain team dynamics. On the other hand, there was focussed responsibility and duties delegation due to lower overlap of expertise or skill sets i.e. top-bottom knowledge sharing work culture. Finally it could be seen that low performance oriented reward system will indulge lesser self directed team development for the new developed coal brand. Overall Reliance Industries enhanced working capital or liabilities (payroll based employment to improve safety need for the employees). Higher micro managerial control will enhance operating efficiency and productivity on short-term basis. Propositions Self directed teams can enhance operating margins and long-term productivity via knowledge sharing, mentoring and moving down the need hierarchy. On the other hand, self directed team formation is highly culture centric and could be effective in highly individualistic and advanced economies due to performance based reward system and basic need satisfied workforce attributed to unemployment benefit programmes by national governments such as United Kingdom. The basic elements for self directed teams to enhance competitive advantage for a corporation are: Team objectives well defined or streamlined Recruitment of self motivated and cross skill set individuals Performance based reward system Indirect leadership of senior personnel based on knowledge and team growth cycle Macro economic culture and values of individuals Although India is highly collectivistic nation still self directed teams could persist in individualistic cultural background such as United Kingdom. Thus culture has indirect impact on team dynamics at the formation process stage. Cultures with low uncertainty avoidance scenario will enforce employees to take risks and innovate as per their skill sets and knowledge base. This is the basic criteria for effective employment of self directed team and improves long-term competitive advantage of stakeholders. Finally, micro-managerial control is indirectly proportionate to cultural differences and traditional business environment dynamics. Overall self directed teams will enhance efficiency and productivity if Team goals are well defined Indirect mentorship programme persists or develops in particular team and finally High emphasis on performance based reward compensation References A.H. Maslow, (1943). A Theory of Human Motivation, Psychological Review 50(4):370-96 Hofstede, Geert (2001). Culture's Consequences: comparing values, behaviors, institutions, and organizations across nations (2nd ed.). Thousand Oaks, CA: SAGE Publications, pp 121-133 www.ilo.org J. Richard Hackman (1986).'Psychology of Self-Management in Organizadons" in Psychology and Work: Productivity Change and Employment, American Psychological Association, pp 111-114 Charles C. Manz and Henry P. Sims, Jr. (1989) ‘SuperLeadership: Leading Others to Lead Themselves, Prentice-Hall, pp 67-69 Edward E. 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