Management - Planning, Organising, Leading And Controlling - Coursework Example

MONASH UNIVERSITY MGW 1010 – Introduction to Management ‘Planning and Leadership in Pursuit of Good Service Delivery’ Table of Contents EXECUTIVE SUMMARY..................................................................................................... ii 1.0 INTRODUCTION.......................................................................................................... 1 1.1 Purpose............................................................................................................. 1 1.2 Background Information..................................................................................... 1 1.3 Scope................................................................................................................. 1 1.4 Plan.................................................................................................................... 2 2.0 DISCUSSION............................................................................................................... 3 2.1 Planning............................................................................................................. 3 2.1.1 Defining Planning................................................................................ 3 2.1.2 The Service Management Perspective............................................... 3 2.1.3 Some Pitfalls to Avoid in Planning...................................................... 4 2.2 Leadership......................................................................................................... 5 2.2.1 Defining Leadership............................................................................ 5 2.2.2 The Role of Leaders............................................................................ 6 3.0 CONCLUSION.............................................................................................................. 7 4.0 RECOMMENDATIONS................................................................................................ 8 REFERENCES.................................................................................................................... 9 EXECUTIVE SUMMARY This report examines the definitions and roles of planning and leadership in good service delivery, in the context of Philippine Airlines (PAL). Philippine Airlines, while considered the flag carrier of the country, has recently lost its leading market position to its nearest competitor, and has been financially troubled; to correct this, PAL has recently implemented a plan to outsource three of its business units, which will allow it to focus more closely on its core business of providing passenger service. Planning is often confused with strategy, just as leadership is often confused with management. These concepts are of particular interest to the idea of service management, because within the perspective that provides the framework for the customer- or market-oriented approach defined as service management, the distinctions between “planning” and “strategy” and “management” and “leadership” largely become irrelevant. Because a focus on good service delivery requires a holistic approach to management, the overall strategy of the organisation and the specific planning of its component parts must be aligned and complementary, rendering the distinction between the two meaningless. Likewise, leadership and management in a service-oriented enterprise occur in a framework of great collaboration and co-ordination between the organisation’s separate parts, removing much of the structural importance attach to positions within a hierarchy. To make the best use of its new organisational form, PAL must re-orient itself as a service delivery organisation, applying the perspectives of service management. Building a culture of customer service, using clear metrics available to it (in terms of passenger numbers) to set goals and measure success, and developing a committed, service-oriented workforce are keys to the airline’s future success. 1.0 INTRODUCTION 1.1 Purpose The purpose of this report is to consider the challenge of good service delivery for an example organisation and to evaluate two functions of management and their contribution to service quality. This evaluation will allow the presentation of a number of recommendations applicable to the circumstances of the example organisation, or other organisations with similar characteristics and challenges. “Service delivery” in the context of this report means “services which create value for the enterprise through the generation of revenues... [and which] is concerned with service delivery to external customers.” (Gibbs, 2006, p. 3) Thus the focus is on internal processes which support service delivery, rather than on the final process of delivering service; in this way, the concepts evaluated have greater application to different kinds of businesses. 1.2 Background Information The example organisation for this report is Philippine Airlines (PAL), the flag carrier of the Philippines and along with Cebu Pacific Airlines, one of the country’s two major air carriers. In October 2010 PAL received government approval to outsource its catering, ground service, and reservations centre operations, which will be handled by three new companies under contract (abs-cbnNEWS.com, 2010). This issue is relevant to service delivery because as well as being a move to improve PAL’s poor profitability, the outsourcing is intended to improve the airline’s competitiveness, having been surpassed as the Philippine’s leading airline by Cebu Pacific in 2010 (CAPA Centre for Aviation, 2010). Since PAL and Cebu Pacific serve the same market, superior service delivery and value is a direct factor in determining the airlines’ competitive positions. 1.3 Scope Although it is probably worth noting that the outsourcing plan by PAL has caused the airline considerable difficulty with the union representing the workers affected by the plan (abs-cbnNEWS.com, 2011), the scope of this report focuses on the management functions of planning and leading in terms of the airline’s new organisational form after the transfer of its three service divisions to independent contractors, which was scheduled to happen on October 1. This perspective will address service delivery in the context of significant organisational change, and includes issues of employee motivation, performance management, and strategic and operational planning. The report makes the assumption that the objective of the organisational change for the airline is to implement it without reducing its level of service. This differs from actual events, because in addition to the labour difficulties mentioned above, PAL did in fact announce that it would reduce its number of flights temporarily to accommodate the implementation of the outsourcing plan (abs-cbnNEWS.com, 2011). Most of the literature reviewed for this report, however, addresses planning and leading from the perspective of raising or at least maintaining existing service levels through an organisational change. 1.4 Plan The remainder of this report proceeds as follows: The management functions of planning and leading are discussed in turn, drawing on a review of relevant literature on these two topics to establish a conceptual background, identify important related concepts, and show how these ideas are connected and support each other. Following these, some conclusions about how the ideas revealed by the literature are relevant to and can be applied by PAL’s management to address good service delivery are made. Finally, a number of specific recommendations that can be implemented by the airline will be offered. 2.0 DISCUSSION 2.1 Planning 2.1.1 Defining Planning Planning can be defined as identifying and employing present means to achieve a future goal or objective (Benowitz, 2001, pp. 47-48). That means the goal needs to be defined as well, which can be done rather easily in the present case: The goal for Philippine Airlines is to attract more passengers and therefore increase its revenue. A positive result would represent better service delivery compared to its competitors, since PAL is providing exactly the same sort of service – i.e., moving people from point to point using aircraft – and a direct comparison is possible. “Planning” and “strategy” are often used interchangeably, and are often confused. In a study of marketing strategy and planning, marketing managers surveyed offered a number of definitions for strategy which could be distilled into a generalisation that strategy is “a plan to maximize the probability of capturing targeted business through manipulation of controllable factors such as product design, advertising, cost control, and market knowledge.” (Morris & Pitt, 1993, p. 44) That definition suggests, however, that “planning” might best be considered as a component of strategy, and that any particular strategy might comprise a number of plans. Just using the definition of Morris and Pitt as an example, ‘designing a product’ would require a plan, ‘advertising’ would require a different plan, albeit one that would be guided to a considerable degree by the design of the product to be advertised, and so on. This differentiation is made clearer by Porter (1987, p. 43), who asserts that strategy has two forms. Competitive strategy is based on the output of an organisation’s business units, what each does to give the company overall a competitive advantage. Corporate strategy is the overall strategy that connects the competitive strategies together and ideally makes them mutually-supporting, or as Porter puts it, “more than the sum of their parts.” Another way to look at the difference is to think of planning as a function of time or scope. Shorter-term and narrower-focus planning, such as would be applied to the specific functions of a business unit or department (and thus comparable to Porter’s ‘competitive strategy’) can be thought of as “operational planning”, while longer-term and broader planning towards goals – which are often revealed in an organisation’s “mission” or “vision” – can be thought of as “strategic planning.” Depending on the nature of the firm, and provided the firm understands the difference between the two, the latter may not necessarily be required to produce good service performance. With sound operational planning, strategy can and is sometimes successfully managed by choices at critical moments (French, Kelly & Harrison, 2004, pp. 767, 774). Thus the first important step in an overall planning process may be identifying the best perspective for the organisation to adopt towards planning. For a service-providing organisation, that requires an understanding of the framework that works best for service management. 2.1.2 The Service Management Perspective The service management perspective is important to planning – whether that is of an operational or strategic nature – because it provides a framework of values which, if given the appropriate level of attention, lead to good service delivery. The framework of values has five main components (Grönroos, 1994, p. 7): An overall management perspective: This means that the entire organisation is working towards a common goal – superior service delivery – according to management principles that can be commonly applied to every part of the organisation. The criteria for measuring performance are customer- or market-driven, rather than measures of internal efficiency: This essentially makes every position within the organisation a customer service position; therefore, operational and functional planning and performance assessment should be based on what each position contributes to service delivery (Morris & Pitt, 1993). Quality management is integrated into overall management, and not treated as a separate concern: This affects planning because quality control functions must be integrated into the normal workflow. Internal development of personnel: The main thing this accomplishes is to reinforce commitment to company goals and perspectives, and as such is more a leadership issue to be discussed in the following section rather than a planning issue. It does relate to planning, however, in the sense that, like quality management, it requires the integration of personnel development processes that could once be treated separately into the mainstream of operations and processes. A ‘holistic’ perspective on organisation functions and structure: The service management perspective emphasises cross-functional abilities, internal collaboration, and lateral communication. In this sense it is a completely opposite perspective from the classical theory of management which emphasises specialisation and division of labour (Grönroos, 1994, p. 9). The main implication of the service management perspective to planning is that it greatly increases its complexity. The overall strategy and the specific plans at the levels of individual departments or business units are not clearly separated, and everything must be complementary. In a sense, this removes the distinction between competitive strategy and corporate strategy (Porter, 1987), since both are focused on the single goal of customer service. 2.1.3 Some Pitfalls to Avoid in Planning Even if a proper service management perspective is adopted, there are some practical problems that arise from basic human nature that may adversely affect planning. One of these is the “status quo bias,” and its near cousin, the “endowment effect”. When faced with a significant change, managers will tend to overvalue the organisation’s existing circumstances and assets. A simple experiment that illustrated the effect was once conducted among students of Cornell University; some were given a coffee mug emblazoned with the University’s logo and then asked after a period of time had passed how much they would be willing to sell the mug for. Other students who were not given a mug were asked how much they would be willing to pay for one. The students who had been given a mug for free valued them at an average of $5.25, whereas those who had a choice to purchase one only offered an average of $2.50 per mug (Roxburgh, 2003, p. 31-32) This illustrates the importance of maintaining a customer- or market-orientation as described above. Nevertheless, the customer- or market-orientation still must be approached critically, with a rational assessment of what customer and market demands really are because of the danger of another pitfall known as the “herding instinct,” which causes managers to follow what others are doing because of a “misestimation of future hedonic states.” (Roxburgh, 2003, pp. 35-37) What Roxburgh is saying, in other words, is that people are not very good at forecasting their future state without a comparative reference to someone else, and tend to guess that the outcomes will be significantly higher or lower than they really will be; as a way to compensate, they tend to follow what others are doing. Planning on this basis, however, will lead to inaccuracies. From a service management perspective, planning should be done in the context of the relationship with one’s own customers; “following the herd” as it were would be planning based on others’ relationships with their customers, and is not really rational. 2.2 Leadership 2.2.1 Defining Leadership Just as “strategy” and “planning” often are not given clearly different definitions, “leadership” and “management” are sometimes treated as the same concept. Alvesson and Sveningsson (2003, p. 1439), for example, give one commonly-accepted definition of leadership as an activity or set of attributes which is capable of “producing a change and releasing innovation and development.” Leaders presumably possess some quality that motivates and inspires creativity. They go on to specify some of the differences between “leaders” and “managers” found throughout the literature on management theory: Leaders are visionary, passionate, creative, inspiring, innovative, and courageous. Mere “managers”, on the other hand, are rational, consulting, persistent, tough-minded, analytical, and structured (Alvesson & Sveningsson, 2003: 1439). Pearson and Parker (2008, p. 46) by contrast describe management as the ability to identify, develop, and support people so that their individual contributions and contributions as a group promote organisational prosperity. While presented a bit differently, this definition of management still has the same fundamental idea of “encouraging people to perform at their best” that the previous definition of leadership does. Moreover, it is unlikely that a particular person in a position of authority over someone else in an organisation has only the qualities of a leader, or only those of a manager. Many people are both passionate and analytical, or creative and persistent at the same time. This view of leadership and management follows the classical view expressed by scholars such as Fayol, Mintzberg, and Katz, who all in some way consider leadership a routine part of management. The difference between leaders and managers, if there is one, may be that there is some ‘extraordinary’ quality that leaders are perceived – and perceive themselves – to have, so that even relatively ordinary activities are considered special in some way (Alvesson & Sveningsson, 2003, p. 1448). The special qualities are in some way attached to the position; managers and others who are higher in the table of organisation than others assume that what they do is “leadership”, and more importantly, those below assume that because the higher-ups are doing it, even a simple action like making small-talk or being cheerful, inspiration should be taken from it. It can even be expressed in a simple formula: “(1) mundane act carried out by (2) a manager and (3) labeled leadership means (4) an expectation of something significant, even ‘magical’ being accomplished.” (Alvesson & Sveningsson, 2003, p. 1455) This notion seems to hark back to the ideas of classical management, however, and runs counter to the perspectives of service management. The reason it does is because it is grounded in trait theory of leadership, which asserts that a leader has certain qualities – whether inherited or acquired – that set him apart from non-leaders. In the service management perspective, the individual is much less important. Leadership traits do matter, but are irrelevant without their proper application (Kirkpatrick & Locke, 1991, p. 49). 2.2.2 The Role of Leaders One of the core components of the framework of service management is the internal development of personnel, not only at the functional level of job skills, tasks, and knowledge, but also in terms of instilling “team spirit” and commitment to the organisation and its goals, which, in the service organisation, is a commitment to good service delivery (Grönroos, 1994, p. 7). But development works in both directions. One of the most important jobs of the organisation’s top leadership is to identify the people who serve pivotal roles throughout the organisation, who can bring their key knowledge and experience to the processes of planning, organising, controlling, and leading the enterprise (Bryan, 2009, p. 5). Inasmuch as the leadership of the organisation should seek to shape the people within it, it must allow the people to shape it as well, because it is in the individual workers where the interactions that lead to competitive advantage occur, according to Porter (1987). Lowering the boundaries and making leadership more collaborative also makes it easier for the people to engage one another on an emotional level, which is sometimes necessary to help motivate people and overcome uncertainty (Dean, 2009, p. 31). In addition, challenging people with roles they may not be familiar with – but certainly, should be otherwise qualified to fill – will help to reduce the “mystique” about leadership, and lead to a more open, communicative organisation. From a theoretical perspective, then, leadership in the service management context needs to follow transformational leadership theory, because development and empowerment of individuals in the organisation is so important. The effectiveness of transformational leadership styles over more conventional leadership methods in developing followers has actually been borne out by direct experiment comparing the two (Dvir, Eden, Avolio, & Shamir, 2002. pp. 737-739). 3.0 CONCLUSION Without having an intimate knowledge of the specific functions and environment of a particular organisation such as Philippine Airlines, the focus here becomes more general and oriented towards “strategy” rather than “planning.” What the literature provides, then, is not so much guidance in “how to plan”, but rather how the company might adopt a useful orientation and management mindset from which to embark on the needed planning processes. This starts with a proper orientation of PAL towards service management. “Total quality” in the customer-provider relationship is the key. PAL cannot offer its customers superior product-based utility, because it is essentially providing the exact same product – a seat on an airliner for the purpose of travelling from Point A to Point B – as all of its competitors. It cannot technically differentiate that product to a great enough degree to make it a superior product than what the competition offers, so it must focus on offering higher total utility, or an overall superior experience for the customer, which is the root of service management (Grönroos, 1994, p. 5). This begins with the identification of the organisations core functions, components, and personnel, and approaches planning from the perspective of creating and strengthening internal relationships amongst them to achieve the goal of good service delivery (Porter, 1987, p. 58). In the context of the service management framework which demands a far greater degree of collaboration and mutual support amongst workers and departments, the concept of leadership as a transcendent, “special” quality that is in some way conferred by one’s position should be avoided at all costs. Leadership is important, but it should be viewed in the context of the organisation’s overall objectives: on the one hand, developing the people so that they are individually committed to the organisation’s mission and goals, and on the other, using the talents of the individuals to give shape to the organisation and its strategy. With these ideas in mind, this paper concludes with a number of recommendations of how planning and leadership can be employed to provide good service delivery at Philippine Airlines. 4.0 RECOMMENDATIONS Set customer-based or market-based metrics for measuring performance and overall organisational success: For Philippine Airlines, this should be rather straightforward; numbers of passengers, particularly numbers of passengers flying repeatedly with the airline are easy to track and measure, and correlate directly to the airline’s profits and its public image. Every person working for PAL in some way contributes positively or negatively to the desired outcome of having passengers board their planes. The challenge will be to define how each position contributes, and to set metrics based on that to measure performance. Establish a culture of customer service: One way in which this could be done is to have people who do not regularly have face-to-face customer contacts – workers other than flight crews and cabin attendants – take the time to do so. Have employees from other departments greet customers at the gate or check-in counter. Also, have them take flights as passengers, so they can assess first-hand how service is being provided. In planning, set a clear objective first, then find ways to accomplish that: PAL knows at any given time how many aircraft and how many seats are available; since the measure of success is putting people in those seats, a clear target in terms of a number can be established. All planning should be made with the objective of reaching that target. Identify key personnel to serve as part of the leadership team: These should be drawn from across all parts of the organisation, so that the full range of skills and knowledge is represented. This will help to co-ordinate planning across the entire company, and prevent conflicts. Avoid encouraging “leadership mystique”: Making the leadership team more consultative and giving personnel opportunities to interface with customers first-hand should help to avoid this, but care will have to be exercised to prevent a simple matter of structure giving more significance to basic tasks and interactions than is needed. REFERENCES abs-cbnNEWS.com. (2010, October 31). PALEA slams DOLE decision on layoff of 3,000 employees. ABS-CBN News [Online]. Retrieved from http://www.abs-cbnnews.com/nation/10/31/10/palea-slams-dole-decision-layoff-3000-employees. abs-cbnNEWS.com. (2011, September 27). Protest forces PAL to cancel all flights. ABS-CBN News [Online]. Retrieved from http://www.abs-cbnnews.com/business/09/27/11/pal-cancels-all-flights-until-6-pm. Alvesson, M., and Sveningsson, S. (2003). Managers Doing Leadership: The Extra-Ordinarization of the Mundane. Human Relations, 56(12), 1435-1459. Benowitz, E. (2001). Principles of Management. New York: Hungry Minds Books. Bryan, L. (2009). Dynamic Management: Better Decisions in Uncertain Times. McKinsey Quarterly, December 2009, 4-12. CAPA Centre for Aviation. (2010, September 3). Philippine Airlines struggling as Cebu Pacific becomes largest carrier. CAPA Centre for Aviation. Retrieved from http://www.centreforaviation.com/analysis/philippine-airlines-struggling-as-cebu-pacific-becomes-largest-carrier-in-the-philippines-34300. Dean, D. (2009). A CEO’s Guide to Re-energizing the Senior Team. McKinsey Quarterly, December 2009, 29-34. Dvir, T., Eden, D., Avolio, B.J., and Shamir, B. (2002). Impact of Transformational Leadership on Follower Development and Performance: A Field Experiment. The Academy of Management Journal, 45(4), 735-744. French, S.J., Kelly, S.J., and Harrison, J.L. (2004). The Role of Strategic Planning in the Performance of Small, Professional Service Firms. Journal of Management Development, 23(8), 765-776. Gibbs, F. (2006). Service Management. UK: University of Strathclyde. Grönroos, C. (1994). From Scientific Management to Service Management. International Journal of Service Industry Management, 5(1), 5-20. Kirkpatrick, S.A., and Locke, E.A. (1991). Leadership: Do Traits Matter? Academy of Management Executive, 5(2), pp. 48-60. Morris, M.H., and Pitt, L.F. (1993). The Contemporary Use of Strategy, Strategic Planning, and Planning Tools by Marketers: A Cross-national Comparison. European Journal of Marketing, 27(9), 36-57. Pearson, G., and Parker, M. (2008). Management or Organizing? A Dialogue. Business and Society Review, 113(1), 43-61. Porter, M.E. (1987). From Competitive Advantage to Corporate Strategy. Harvard Business Review, May-June 1987, 43-59. Roxburgh, C. (2003). Hidden Flaws in Strategy. The McKinsey Quarterly, 2003(2), 27-39. Read More