Competing Values Framework - Case Study Example

EVALUATING COMPETENCIES A CRITIQUE OF COMPETING VALUES FRAMEWORK TABLE OF CONTENTS Page Introduction 2 Management Models 3 Analysis of Organizations 4 5 Conclusions 1 Introduction The culture of an organization is its integral part and behaviours and attitudes of its people are responsible for the organization’s success or failure. The primary image of an organization is akin to family, clan or tribe where relationships, needs, feelings and skills are the characteristics of its members. An organizational culture framework founded upon "Competing Values Framework" was developed by Quinn et al (1996). An organization has a predominant internal or external focus. Internally it covets flexibility and individuality to bring out the best from its human and other resources. Its external focus is on acquiring stability and control. 2 Management Models The competency framework describes the multifaceted nature of management. Quinn divides the framework into four models, where each reveals two prominent roles. a) The Rational Goal Model: Roles-Producer and Director. This model puts emphasis on productivity and profit as the measure for organizational efficiency. Under this model the competency of the producer is working productively, effectively managing time, and accepting responsibility as part of the role. The competencies within the director role include strategic planning and goal setting, and delegation of authority b) The Internal Process Model: Monitor and Coordinator. The hierarchical arrangements that create a professional organization are the basis of this model. The rules, regulations, policies and traditions influence decisions and managers assume the role of monitors and coordinators of all actions. c) The Human Relations Model: Mentor and Facilitator. The underlying features of this model are emphasized commitment, empowerment and morale. The central issue is the association of human resources with organizational culture for achieving organizational efficiencies. The mentor and facilitator roles are a perfect fit within the human relations environment. d) The Open Systems Model: Innovator and Broker. Adaptability, flexibility and responsiveness are the hallmarks of this model which aims at achieving competitive advantage through maximum flexibility. Competencies under the innovator role include being flexible and open-minded, thinking creatively, and converting ideas into solutions. As a broker the management competencies will be negotiating agreements, and creating networks through building power and information bases. 3 Analysis of Organizations The best critique would be to demonstrate how two different organizations have adopted different management models to realize their objectives. Southwest Airlines The most valuable assets of any business are its people. This is one fact that is singularly recognized at Southwest. Therefore they have a crated a People Department instead of the HR department to give it a more humane face. Whereas in the aviation industry and indeed in other industries too, Human Resources represent a professional, structured and therefore very stiff-collared concept, at Southeast it means entirely the opposite. Integrity and ability to mix and not qualifications and skills are more valuable and get preference in hiring. More importance is given to the concept that the entire organization is a large family and therefore the hierarchy is only for recognition of prime responsibility and not for power. They have empowered the employee to such an extent that he or she becomes an integral part and goes out of the way to preserve the company’s interest above their own. All these activities are regularly performed at wages and salaries that are lower than the industry and work is for longer hours. In fact people are prepared to take a salary cut to join Southwest. The predominant factor is that since the concept of family has been introduced, a new dimension has been factored in. Family means fun, integrity, teamwork, shared goals and informal but disciplined atmosphere. This is the glue that binds the entire workforce and eliminates power struggles and conflicts. Everyone knows each other’s usefulness and instead of encroaching on someone’s space the attitude is of mutual respect. The result is enormous increase in productivity that compensates for the low fares and brings in profits. The company has been profitable continuously for over 25 years now which is ample proof of its successful adoption of the Human Relations Model. Wall-Mart Wall Mart company is very well managed and the stores operate on a no-frills basis catering mostly to the middle class and lower middle class consumers. Despite this Wall-Mart has invested heavily in technology. Its ware houses, known as fulfillment factories, are committed to the one day delivery schedule and the stores are clustered around them to ensure this. Very early on it was decided to buy directly from manufacturers to eliminate the middleman’s cut and initially the company was firmly promoting the “Buy American” programme. Later of course this was dropped in favour of globally procured goods for the benefit of the consumer. The company grew very quickly and the annual growth rate was 35%, far above the retail industry average of around 10%. From a humble beginning as a small-town five-and-dime, Wal-Mart Stores has grown to become the worlds largest corporation and a global economic force with an annual turnover of over $245 billions. All along there has been one singular objective; to cut the price persistently and continuously. Economists credit the company with not only boosting its own bottom line but, due to its enormous size, it has held down the rate of inflation for the entire economy. The efficiency of the company can be gauged from the fact that 4% of the growth in US economy’s productivity during 1995-1999 was due to Wall-Mart alone. This was estimated by researchers at McKinsey Global Institute. But this strategy had its price. By squeezing the prices to their limits, the suppliers of Wall-Mart were forced to look overseas where cheap labour was available. This resulted in flight of manufacturing jobs to under-developed and developing countries. To keep improving on prices and reducing costs jobs kept moving to poorer countries. The company did not even spare its own 1.2 million American employees. They are paid the lowest wages and the company admits that some may find it difficult to survive on these pay-scales. Cutting prices in now a habit with the company and it continuously looks for ways and means to cut costs. The company has successfully adopted the Rational Goal Model with some elements from the Open Systems model that explain its strategies to source its products from cheap overseas suppliers. 4 The case of Gillette Gillette dominated the worldwide Safety Razor Blade Industry. Ever since it commenced business over a century ago it has had the unique position of leading industry with innovations. It was the first to introduce the concept of the Safety Razor and has always been able to introduce new products and features continuously. It is this factor alone that has got it 70% of the US market in 2000 and about 50% share of the market outside the US. While the majority of shares is held in public but a sizable stakeholders are employees, both present and retired ones. The single largest share holder is Buffet Warren who holds about 10% of the company stock. They were worried over the declining stock prices especially since 1997 through 2001. The decline has been sharp from a valuation of $ 4.8 billion to $ 1.9 billion. They needed a quick turnaround or they feared the company will be a takeover target once again. From 1997 onwards there have been both internal and external pressures on Gillette which have resulted in stagnated sales, declining profits and eroding stock values. Internally one of the most successful Chairman, and CEO of Gillette Colman Mockler died unexpectedly and the successors enjoyed the continuing buoyancy up to 1997 and the decline thereafter was not controllable. The company culture was and continues to be development oriented and not enough attention is paid to customer services. The sales strategy has also taken hits from bigger retailers like Wal-Mart who now promote their own brands. Gillette followed the Open System Model of management until the death of Mockler. Thereafter it went adrift as no other leader could step into his shoes. The result was the eventual takeover of Gillette by Proctor & Gamble. Its strength was R&D and had it converted to the Rational model the story would have been different. 5 Bibliography Quinn, R. E., Faerman, S. R., Thompson, M. P. & McGrath, M. R. (1996). Becoming a Master Manager: A competency framework. New York, NY: Wiley. Read More