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Chapter 4: Planning for a more secure future

After becoming familiar with the various management tools and processes presented/discussed in Chapter 4, let’s have a look at the energy industry and its future planning for one vital issue that the industry is facing right now.

An energy crisis is fast approaching Australia and both, state and federal government do not agree on fixing solutions. As a major gas supply shortage is predicted from next year, the Australian Energy Market Operator (AEMO) is warning policy makers and energy markets that Australia could shiver in cold winters and be overheated in hot summers.

Gas is currently used to power the electricity generators. As a consequence of a gas shortage, the industries and the consumers will experience a shortfall in electricity supply as well. Shortages of both gas and electricity will affect New South Wales and South Australia first, then Victoria in 2021 followed by Queensland between 2030 and 2036. According to AEMO, the demand for gas was greater with the use of the coal-fired power stations. Therefore, the Australian Energy Market Operator authority advises that new development of gas-powered electricity generators should be created, due to decrease in gas flowing from existing fields, mostly noticed in Bass Strait coupled with the need of LNG(liquefied natural gas) which supports Queensland’ export projects. New developments would make sense considering that the existing assets of gas development are old and inefficient, according to the energy expert Andrew Stock from the Climate Council.

Another option to overcome the gas shortage was announced by Frank Calabria, the chief executive of Origin Energy, who said that more gas was likely to be sold into the domestic market from the Queensland’ export projects mentioned above. Even if this option can be seen as an alternative solution, it is not a very efficient one considering that the commercial and industrial businesses are facing financial difficulties due to the rise of gas production costs. Also, due to Hazelwood closure the wholesale power prices will go up, therefore our prices will be three, four times higher than our competitors, situation that can force businesses to move their plants overseas.

Another reason for the increased energy prices is the advent of the entry of Australia’s east coast into global gas marketplace. As a consequence, regardless of the domestic supply the prices will no longer return to the previous levels, when Australian gas was isolated from global markets. That can be possible if Commonwealth or state government embrace the suggestion to reserve a percentage of gas for domestic use. However, the gas is known as a polluter, generating great emissions and contributing to climate change. Therefore it is recommended that states should adopt their own renewable targets, as part to a national policy.

Adopting renewable energy is not protecting the environment only, is also now the Australia’s cheapest source of energy, even with the addition of the cost of storage in order to make intermittent power source reliable. Despite of having the renewable energy as a cheaper solution, aggressive Renewable Energy Targets-meaning that a percentage of the state and territories electricity supplies are coming from renewable sources, without an emission trading scheme and a price on carbon, even these prices can rise.

Planning for the best outcome is a big challenge for political, as well as industry, leaders.

Consider the following questions for discussion:

  1. From the post, what types of planning are energy industry decision makers engaging in at this stage?  What type of planning would you recommend for them?
  2. From the post, what goals can you identify? Which are the stated goals and which are the real goals? How can you tell them apart? Based on what?
  3. What elements of strategic planning are evident in the article? What elements are missing? How would you, as strategic manager in Origin Energy or Hazelwood, use these missing elements?

 

 

 

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Chapter 3: Decision making. No, it will not get simpler.

Third time’s a charm! Ready to flex those managerial synapses? Today’s task is a real world-class brain-twister… get ready to take the heat!

Let’s get cracking…

…by reading back over the content on decision making in Chapter 3 of the textbook.  Once you’re done, you should be fully equipped to deal with a simple problem called “penalty rates”.  Easy! Right?...

Summarising very briefly:

Before you start reading this, quickly record your views on penalty rates: are they good for the economy? Are they destructive? Will cutting them be of benefit to Australia as a whole? Keep these records for the end of the reading piece.

On Friday, the 24th of February, the Fair Work Commission ruled that Sunday and public holiday penalty rates be reduced for full-time and part-time workers in the hospitality, retail and fast-food industries.  Although the commission acknowledged that this will create difficulties for some workers, it justified its decision by claiming that the cuts would lead to increased services and trading hours on public holidays and Sundays.

This decision, which is likely to affect many people like you, was received with a heated discussion from businesses, workers, families, and politicians. 

As you can imagine, people who benefit from penalty rates are not usually very high earners as it is.  Typically, workers in the affected industries rely on these penalty rates to make ends meet and to cover their necessary expenses.  The Australian Council of Trade Unions (ACTU) said nearly half a million people, including some of the country's lowest-paid workers, would lose up to $6,000 a year.  For some people, this could make the difference between earning enough to survive, and going bankrupt.  Union groups are getting ready for a long and persistent battle on social media, targeting not only employees from the affected industries, but other industries as well.  They sense concern in other workers because of the precedent that this decision may set for them.

On the other hand, retailers claim that reducing penalty rates will result in more shifts and more work opportunities for the workers, as well as extended services to customers.  However, a similar cut to penalty rates in Perth back in 2015 did not show convincing evidence that this was successful. 

Although this ruling presents an opportunity for businesses to spend less money on labour, not all businesses intend to take advantage of that.  In smaller communities, like Maitland, there are voices from local businesses rejecting the cut.  Keeping the interests of their workers in mind, and keeping in mind that the workers are often friends and family, these businesses promise to continue to pay their employees as before.

Other business groups continue to fight for this rates but against the unions, claiming that this decision has been underway for two years, and will create more jobs.  But then again, having a job does not protect you from poverty, as shown by multiple economic researchers.

Politicians are also part of this discussion, as they are the ones who are responsible for setting the relevant legislation.  Decisions among this group often include contradictions.  For example, although the unions are fighting this decision, in September 2016 one of the has signed off on an agreement which raised the wages of weekday retail workers, but left weekend workers worse off. 

The Fair Work Commission provide reasons for their decision (see Chapter 6 of the decision), and the factors they considered, including the patterns of employment, the needs of the industries, and the social changes in weekends activities over time.  This list of considerations was compiled over a long period.  The committee heard evidence and submissions over 39 days of hearing in 2015 and 2016.  They received evidence from 143 lay and expert witnesses, and cross-examined 128 of them.  They received more than 5,900 submissions from the principal parties, State and Territory Governments, Church based organisations, political entities and individual employees and employers. This is a lot of information, as you can imagine, to make one complex decision!

 

Consider the following questions for discussion…

  1. This will be easy to answer, but you will surprised how often this issue is overlooked in managerial discussion: is the penalty rates cuts question a structured, or an unstructured problem?
  2. Why would bounded rationality play a part in how people normally consider the penalty rates issue?
  3. Most penalty rates issues are discussed in group forum – at least among policy makers.  What kind of problems, biases, and benefits does this group setting bring to this problem?
  4. If you were the manager of a business in hospitality, pharmacy, retail, or fast food, would you cut back your employees’ penalty rates? How would you approach that decision?  What considerations would guide you, and how would they relate to the decision making process in Figure 3.1?
  5. What kind of biases listed in Figure 3.2 do you think affect a decision to cut penalty rates for the Fair Work Commission?  And for businesses?  How would they affect you if you were one of the managers?
  6. It may be tempting to follow the rational decision-making approach to every problem you encounter as a manager, but keep in mind realistic conditions, that are similar to those in managerial workplaces: time pressure, tasks overload, and multiple stakeholders.  How would you recommend to address this problem? 

 

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Chapter 2: The External Management Environment

Welcome back for another round of exciting management case studies!  Today we will get in close touch with a major global problem: climate change.  Management and organisations are not separate from the rest of the world and nothing illustrates the connection of an organisation to the external environment like this particular example.   Let’s check out some organisations that are involve in managing this issue, the components of their external environment and what they mean for managers.

To start with…

…refresh your knowledge of the various factors in the external environment that managers should be aware of as part of their job. Figures 2.1 (p. 30) and 2.2 (p. 32) in your textbook describe these in detail, so you should definitely have a closer look at them before sinking your teeth into this case.  Once you’ve done that, check out this description of the Adani coal mine battle involving a mining company, governments, and environmental groups.

So, to summarise…

Adani Group is a leading infrastructure conglomerate from India operating internationally.  It has operations in Australia, where it operates mines, ports and power plants.  Over the last few years has tried to expand its operations in the Carmichael mine Queensland, into what will become the largest coal mine, with six open-cut pits and up to five underground mines.  The cost of the project is estimated at $22 billion, and will include a 31.5 kilometres of permanent rail line, which will form part of a 389-kilometre heavy haul line from the mine in the Galilee Basin, west of Rockhampton, to the Abbot Point port, south of Townsville.  The life span of the mine is estimated to be between 25 and 60 years, according to the Queensland Government, but the railway will remain in Queensland after that time. 

The coal itself is meant to supply Indian power plants with enough coal to generate electricity for up to 100 million people, after it is processed through the Abbot Point Coal Terminal, off the coast of Bowen in north Queensland.  This way, the coal will provide processing jobs in Queensland, Australia.

The jobs relating to this mine are an important point, and it is a major reason why the Queensland Government, the Australian Govenrment, and many Australian businesses support the expansion of the mine.  The Adani Group predicts the first stage of construction will provide more than 500 positions, mainly for planners and engineers.  Once operational, the Group estimated the mine will provide 2,500 to 3,000 full-time jobs.  The Adani Group has estimated the entire project will create 10,000 jobs through direct and indirect employment.

However, in 2015, Adani Consultant Dr Jerome Fahrer told the Land Court in Brisbane the mine would actually create fewer jobs.  He gave a net figure of 1,464 – about 15% of what the Adani Group has been stating – and the court accepted this estimation.

Why was the court involved in the first place?  At that time (December 2015), Coast and Country, a community conservation group from Queensland, took the project to the land court to try to stop the Queensland government from issuing Adani's mining leases and approvals.  The environmental group was concerned that the expansion of the mine would threaten black throated finch populations, damage ground water from nearby springs, contribute to climate change, and that the economic benefits would be less than those forecast by Adani.

The environmental groups are getting better and better at battling the coal mine project.  By now, it is supported by the activist group GetUp!, has a $1 million budget, nine full-time staff including polling and social media experts, and hundreds of volunteers.  In response to their actions, Adani have tried to get the Australian Prime Minister to introduce a law that would not allow activists from taking legal action against them.  The environmental groups, including the Australian Conservation Foundation, are launching a campaign targeting 13 marginal coalition seats in Queensland, NSW and Victoria.  The campaign uses cutting-edge and traditional tactics, contacting voters by telephone, advertising, and a social media.  In addition, by challenging their socially responsible image with a satirical video, the environmental group SumOfUs targeted Westpac bank, to join a many other financial institutions who refused funding for the $22 billion project.

On the other hand, local politicians, such as the Mayor of Rockhampton, Margaret Strelow, see the mine as a business opportunity that needs to be grabbed.  Adani is holding a roadshow explaining the mine and its effects on the local economy, and 300 local businesses attending are keen to get involved.  This also means jobs for locals, and economic growth, at least for a few decades. 

Some issues to notice and pay particular attention to here are…

  • The effects of the environment on organisation
  • The external environment of the organisation
  • Customer responsiveness
  • Managerial responses

Consider the following questions for discussion…

  1. Figure 2.1 on page 30 describes the organisation through a system view.  How would you describe the elements which are relevant to the Adani Group?  To the Australia Government and Queensland Government? And the environmental groups?
  2. Figure 2.2 on page 32 of your textbook lists the elements of the organisation’s specific environment, and describes them in detail on pages 39-43.  If you were a manager in Adani Group, the Queensland Government, or the environmental groups, which of these elements would you be particularly attuned to these days?  Why?  How would they affect your daily work?
  3. What businesses and organisations would be affected by the expansion of the mine?  Which ones would be affected favourably and which ones would be damaged?  Keep in mind that tourism is an important sector in Queensland, and the expanding mine is said to damage the Great Barrier Reef.
  4. How would you, as a manager of a business that is strongly affected by the condition of the Great Barrier Reef, prepare for the predictions?
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Chapter 1: Managers and management: Changing roles

Welcome to the first-semester’s blog posts for 2017 for Management: The Essentials.  This is where we’ll broaden the understanding of Chapter 1: Managers and Management.  Let’s get started!

To start with…

…refresh your knowledge of managers’ titles on page 6, and managerial roles on pages 8 to 11 of the textbook.  Then check out a recent story of indigenous youth groups engaging with Hip Hop across the country.  Their story exposes us to organisations of various shapes and sizes, so we have an opportunity to take a close look.

Let’s look at all of those.

So, to summarise…

Besides traditional money-making businesses, other organisations also have managers who fulfil important roles.  A good example are indigenous teenagers groups across Australia, such as The B-Town Warriors from Bourke High School in north-western New South Wales, and their productive collaboration with Desert Pea Media.  Various indigenous youth groups across Australia are now using hip hop and social media to bring attention to social issues affecting their communities.

Over the last 15 years, Desert Pea Media, based in the northern New South Wales town of Byron Bay, is a registered charity that has been visiting remote Indigenous communities to help locals tell their stories through performance.  In recent years, the organisation focused on producing hip hop music videos with Indigenous teenagers.  The reason for this focus is that members of remote communities in Australia relate to American hip-hop and gangster rap.  Expressing local stories with this style of music makes an authentic communication of Australian experiences.

One of the biggest challenges Desert Pea Media faced was bringing Indigenous teenagers out of their shells and getting them to participate.  Young indigenous people tend to experience strong shame over their culture, origins, and identity.  Toby Finlayson, the founder of Desert Pea, explains that for several generations, young Indigenous people have received such messages.  This process of proudly telling their story plays an important role in changing this view within the indigenous community.  Getting the youth to do that is a similar challenge to engaging employees in their work, and in inspiring them to express their full potential.

To engage the teenagers in music and video production, Desert Pea Media designed the projects to accommodate for people with no experience, and to provide an experience which results in strong positive feelings.  This is done in a group, which first discusses issues affecting the community and ideal solutions for them.  For example, smoking during pregnancy, bullying, suicide, are mental health are issues of concern.  These issues are discussed among the local teenagers, with Desert Pea Media members facilitating.  Questions like: what is the issue, where does it come from, why does it exist and why does it continue, how would it look in a perfect world, and what can the people in the conversation do as individuals, communities, and as a nation, to solve the problem.

The process helps engage the young performers in several ways.  First, by designing a process that does not require previous experience or skill level, the performers are less intimidated by the tasks involved.  Also, being part of a group and not being ‘on the spot’ helps them gain confidence.  In addition, the young performers get immersed in the content of their creative production, and have a strong ownership over the outcome.  Finally, each member’s contribution to the performance is not only voluntary and self-driven, but also strongly relates to their self-identity and self-value.  This way, they can take pride in the shared outcome.

Besides facilitating the creative process, a charity must also raise funding.  Having a successful creative product, such as a popular video, helps with branding the organisation and with developing its image.  These creative products also serve to elevate the status of the institutions that the young performers are part of, such as their schools and their communities.  These mutually beneficial outcomes are really what management and organisations should be all about: creating value and benefits to all stakeholders involved ultimately benefits society and humanity as a whole.

Some issues to notice and pay particular attention to here are…

  • Three characteristics of an organisation
  • Managerial titles
  • Managerial functions
  • Managerial skills

Consider the following questions for discussion…

  1. There are two different types of organisations involved in story.  Identify them, and identify how they would vary across the three characteristics of organisations described in Figure 1.1, on p. 5.
  2. Identify the titles of managers who would be involved directly, and indirectly, in the production of the songs and videos described in the article.
  3. Think of the four management functions (p. 8-9).  How would the managers in each type of the organisations you’ve identified in question 1 address each of these functions when they operate to achieve their goals?

Have a look at the managerial skills listed on page 11.  How would these skills be used by the different managers in the different organisations you’ve identified?

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Chapter 12: Communication and Interpersonal Skills: Negotiations

To get started…

Refresh your memory on the various barriers to communication mentioned in your textbook on pages 338-340, to see why it is important to find effective ways of communication, and how managers can overcome barriers to communication.  Check out how managers should communicate when negotiating on pages 347-349.  Then, read about the turbulent negotiations between sugar miller Wilmar and Queensland Sugar Limited (SQL).

So, to summarise…

Although it may seem like the most common and innocent household item, sugar seems to be the newly discovered household nasty.  Nonetheless, there is no denying that as a society we depend on and consume sugar regularly.  Two main parties involved in the sugar production process, the growers and the sugar mill, have been having trouble getting along in Queensland over the last two years, and now, this relationships seems to be breaking down.

The main issue Wilmar has is around joint marketing.  Wilmar has been part of SQL’s marketing group, and would now like to lead it.  If the miller promotes sugar, presumably, and do so successfully, it would be good for everyone: both the miller and the growers.  But the growers are unhappy with this proposed arrangement because they believe that the agreement will come at the expense of their economic interest.

Wilmar on one had claimed that they have consulted the growers, and received positive feedback for their proposal.  The growers, on the other hand, claimed that this is not true.  The growers are now saying that Wilmar’s terms were "commercially unreasonable" and forced unnecessary costs and risk onto growers who chose to access QSL.  They challenged Wilmar to make public its terms in the interests of fairness and transparency.

Wilmar has refused to release its 'on supply' agreement terms, and accused QSL of breaching commercial confidentiality; a claim QSL refutes. 

One major sticking point, excuse the pun, is when the ownership of sugar is transferred.  Wilmar insists that ownership of the sugar would not change hands until it was loaded onto the ship, which they claim is "global industry standard terms", whereas the growers ask for ownership to be changed at the point of delivery to the terminal.  Keep in mind that while you are the owner, you are responsible for the goods, and any damage while it’s under your ownership is also your problem.  Wilmar executive argues that this has already been agreed upon, and is not clear why it is now being rejected.

Wilmar also claim that more and more growers join the agreement with them, as they exist the SQL group.  Just think, if you were a grower singed up with SQL, what effect would hearing that would have on your decision to join or refuse Wilmar. 

Some issues to notice and pay particular attention to here are…

  • Barriers to communication
  • Ways to overcome barriers to effective communication
  • Negotiations

Consider the following questions for discussion…

  1. What barriers to communication would disrupt good outcomes in negotiations?  How would you overcome them?  Why?
  2. If you were to represent Wilmar in the negotiations discussed in this case, how would you prepare for it?   How would you prepare if you were to represent Queensland Sugar Limited?
  3. What is your view on the actual communication that took place?  What barriers do you think are present in the negotiations described in this case?  How would you overcome them?
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Chapter 11: Leadership: strong or distributed?

To get started…

…refresh you knowledge on leadership and trust based on Chapter 11 of your textbook.  Take special notice of leadership traits, the behavioural theories of leadership, contemporary issues in leadership, and elements of trust in leadership.  Then read this article about leading teams into autonomy.

So, to summarise…

Even in this day and age, some people call for ‘strong leadership’ or ‘strong leaders’, where the leader is the one who decides on the course of action, who convinces their staff to rally behind it, and guides them on how to do that.  For example, the Governor of theReserve Bank of Australia Glenn Steven, calls for strong political leadership, to enable economic reforms.  Of course, political leadership is only as strong as the mandate they get from their voters.  As history has shown, strong political leadership does not always lead to the best outcomes, even when democratically elected.  This is also evident among leaders in industry: Steve Jobs was a strong leader, and he did get results, but without him, the sustainability of those results is not guaranteed.

Another way to look at leadership is surfacing as the power of the crowd is discovered: distributed leadership.  This is an open, collaborative, and decentralised style which is required to deal with global changes in work and technology.  The education industry, which tends to encourage the nurturing of each individual, has been using this distributed style in schools.

The aim of distributed leadership is to create self-sustaining teams and organisations, because relying on a single person to maintain company success is not a sustainable way to run.  Even if you find one right person, they will not stay there forever.  And in general teams outperform individuals, and that goes for management too – so to develop an autonomous team is a stepping stone to developing an organisation which does not rely on a single leader.

The article describes the journey one manager, Theodora Pankofka, took transforming her team into an autonomous one.  The team she took over had a history of low performance and autocratic centralised management.  First, Pankofka made a determination: to have the whole team (including herself, mind you) changed.  Then, she met with every stakeholder involved with the team, and tried to get their perspective on what the team delivers them, what the team should change, and what the team does well.  She then spent time with the team categorising all the issues and identifying what needs to addressed.  The team identified quality issues as the most prominent issue, and this issue was addressed by Pankofka, as well as by the team.  As they addressed the problems, the team members themselves communicated with the stakeholders, which not only developed trust with them, but also empowered the team to operate on the same level as their manager.

The next step involved removing the Pankofka from the sole leadership position, and giving individuals on the team opportunities to lead – one at a time.  Pankofka held back and gave the team opportunities to resolve issues, even when she knew the solutions herslf, so that they would know that she trusts them, and thus remain empowered to resolve problems in the future. 

Even when the team failed – which was expected – Pankofka used it to further build the team’s confidence in their own ability to solve problems.  Accepting the team’s failure meant that they now knew that they are in a safe environment, they can take risks, and they also have sufficient resources to practice their learning. 

Then, Pankofka diversified their network, by adding individuals with strengths and expertise which added to the team.  This sometimes meant simply hiring people who come from a different geographical area.  Sometimes you’ll need to dig a bit deeper and find other differences, such as skills or technical expertise. 

In the end, one year down the track, the team was a success story – it was a top performer in the organisation.  Not only that – Pankofka could have stepped off the team, and its strengths would have remained.  This is what distributed leadership is all about – it may be clumsier, but it can be more robust and sustainable in the face of change.

Some issues to notice and pay particular attention to here are…

  • Traits associated with leadership
  • Leadership styles: centre, orientation, managerial grid.
  • Path-goal model, transactional and transformational leadership
  • Credibility and trust

Consider the following questions for discussion…

  1. What kind of traits would expect distributed leadership members to have?  Why?
  2. What leadership style would you say distributed leadership members need, if they genuinely wanted to transform their teams into autonomous? Why?
  3. How do the transactional/transformational leadership styles apply to distributed leadership members, who aim to develop autonomous teams?
  4. How would you assess the leaders’ credibility in general?  How would you assess their credibility on issues like developing autonomous teams?
  5. If you were a CEO who was genuinely committed to developing autonomous teams, how would you develop the trust of your employees?
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Chapter 10: Motivating and rewarding employees

To get started…

… revise the motivation theories that appear in Chapter 10 of your textbook.  Take special notice of Maslow’s hierarchy of needs, McClelland’s three-needs theory, McGregor’s Theory X and Theory Y, Herzberg’s two-factor theory, Expectancy theory, Goal setting theory, and Equity theory.  Then read this article about the experience of Mike Utsler, Woodside Petroleum’s chief operations officer.

So, to summarise…

Six years ago, before he became the COO for Woodside Petroleum, Utsler was BP’s operations senior vice-president, overseeing the North Slope oil project in Alaska.  Back then, the Deepwater Horizon disaster, where the oil rig in the Gulf of Mexico exploded, killing 11 people, and then sank, resulted in an 87-days of oil flowing into the ocean.  Utsler was asked to take charge over BP’s response to the disaster, which he did. 

Taking charge of that response meant great challenges on many fronts: on the practical front, Utsler’s work week was far from comfortable: three years of seven days a week, every day starting at 4:15am, ending around 12:30am the next morning. 

On another front, was the managerial challenge.  Utsler was trained and experienced responder to man-made and nature-made disasters in the gas and oil industry, and he knew he needed a lot more people than he initially had.  His team grew from 435 people to 12,000 in two weeks, and in less than four months, to 48,000.  Recruitment is one challenge.  Then there’s management of this giant crew.

Then, there was the motivational challenge.  Motivating people to do something important, something greater than themselves, is one thing.  Who would not want to be part of an operation to control one of the largest marine disaster?  But motivating 48,000 people to do something that everyone else worldwide was saying they could not do by themselves, is a whole different story.

How did Utsler do it?  He says he made the missions clear first: No one was to be hurt in the efforts to respond, no oil would hit the beaches across the Gulf of Mexico.  He connected with people every day for 15 minutes to tell them what the team did on the day before, the successes and the failures, what they were doing on the day.  Then, when a hurricane came through and pushed oil onto the beaches, the mission changed into becoming the best in the world at picking the oil up, cleaning it up, and removing its impact.  The company needed show the effectiveness of their own actions to its own people.

Then, after three years of that work, Utsler left BP, and he now joins Woodside, which wants to become a leading international oil and gas company, but struggles with its own high levels of bureaucracy.  To address that, Utsler started an idea program, asking staff for ideas to improve the company.  In 2014, 330 workers contributed 900 ideas, and in 2015, 5900 ideas came from workers, and from contractors.  The ideas were assessed by volunteers within the workforce, and eventually by Utsler himself.

Some issues to notice and pay particular attention to here are…

  • The hierarchy of needs
  • McClelland’s three-needs theory
  • McGregor’s Theory X and Theory Y
  • Herzberg’s two-factor theory
  • Equity theory
  • Expectancy theory
  • Goal setting theory

Consider the following questions for discussion…

  1. How would you say the hierarchy of needs model explains Utsler’s way to motivate his team?  How does it fit with Utsler’s motivation to take and continue on the job?  This priority of needs in this case really challenges the “pyramid” structure of the hierarchy of needs model.  How would that fit into criticisms of it?
  2. How would Woodside’s employees seem to fit into McGregor’s Theory X and Theory Y model?  Why? 
  3. How would Utselr’s experience in BP fit into Herzberg’s two-factor theory?    What would be his hygiene factors and what would be his motivators?  What does that teach you about this theory?
  4. How could the extra work put into improving Woodside be reconcile with equity theory, in the case of Woodside’s employees?  What about Woodside’s contractors? 
  5. How could you use expectancy theory and goal-setting to explain Utsler’s success in BP?  What about his current work in Woodside??

 

 

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Chapter 9: Understanding Groups and Managing Work Teams

To get started…

…revise the chapter’s input on teams and teamwork on pages 246-261.  Particularly, take notice of Figure 9.3 on page 251 addressing cohesion and productivity, and Figure 9.5 on page 254, which tells you of the factors relevant for effective teams.  Then check out the story of Geelong council in Victoria getting dismissed

When councils misbehave

City councils are really the most evident form of government that people experience: they are responsible for all of the day-to-day things we live with, like street signs, safety, traffic, waste management, and other basic services which everyone uses.  They are a form of Australian local government, and they usually get elected. 

Maybe because they do not star the national news, local government can suffer from big problems, and not even get noticed.  For example, many councils experienced corruption with regards to planning and construction, or other forms of dysfunction.  Today we will look at Geelong Council which was dismissed by the Victorian government after its dysfunction was deemed beyond repair.

Bullying and harassment were apparently prevalent in the council.  It sounds like female members often suffered from abusive language, and there were allegations that the senior officers deliberately blocked business people who wanted to grow their businesses. 

When the former mayor of Geelong, Keith Fagg, appointed Dr Russell Walker as the executive director of Enterprise Geelong, this brought into the council a person who wanted to address these problems.  Together with Geelong psychologist Gary McMullen he tried to bring these problems to light.  In response to his attempts to address these problems, Dr Walker was rejected by council members. 

Finally, after Dr Walker ‘blew the whistle’ and reported these problems, and an investigation was led by former sex discrimination commissioner Susan Halliday in October 2015.  Major problems were found with the way staff were treated, including bullying.  It has been over 12 months since the report, and the issues were not addressed, so the Victorian government has now dismissed the council. 

But dismissing the council does not end the complications: who will take their place?  Elections are not scheduled for another four years.  In the meantime, Victoria’s government decided to appoint an administrator until 2020. 

Some issues to notice and pay particular attention to here are…

  • Definitions of groups and teams
  • Types of teams
  • Teams effectiveness model
  • Team roles

 

Consider the following questions for discussion… 

  1. Is this article describing a group or a team?  Why?
  2. What type of group or team would this be?  Note, the characteristics of more than one type would apply here.  What are they?
  3. How cohesive do you think the council was?  And how do you think this cohesion affected its productivity?  Why?
  4. If you look at the team effectiveness model, what elements would you say Geelong’s council got right?  And what is it missing?  How could it be better addressed?
  5. What roles can you identify in in the council, and who is fulfilling those roles?

 

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Chapter 8: Foundations of Individual Behaviour: personality and emotional intelligence

Some theory first…

…revise pages 217-222 and pages 223-226 of Chapter 8 briefly. 

Some businesses will favour personality over education, skills, and experience.  Personality can be the root cause behind the paralysis of entire national systems, like the Australian taxation office.  When two top-level executives have a personality clash, you get wasted effort of one entity and ineffective action in another entity.  So one thing is identifying personality traits, and another thing is matching those traits to the job, the tasks, and the people around you.  Let’s have a look at all these aspects.

So, to summarise…

Working with other people means you will be exposed to lots of different personality types.  By now, you have probably worked out some ways of identifying these types: noticing their communication style, their decisions, and their relationships.  There are personality traits that end up earning more money than others (rightfully or not), and some research claims that another personality trait is the single most important trait for all kinds of success. 

Research shows us that matching our behaviour to our personality can increase our happiness.  For example, spending money on things that match your personality can increase your happiness levels, whereas sending it on things that do not match does not.  For example, extroverts who spend money on a book gain less happiness than spending money at a bar, as opposed to introverts, who gain more happiness by spending money on a book than at a bar.  So identifying your personality traits is important for your happiness, and your happiness is important for your success and productivity, so it is important to your workplace too.

How do personality traits get identified? Usually through personality tests.  But personality is usually far more complex than just a snapshot in time of a person’s behaviour.  One of the most common ways to measure personality, the Myers-Brigs Type Indicator (MBTI®), categorises people into 16 groups – with a 4x4 matrix, as the textbook shows.  This has spawned A LOT of research, and some scientists argue that a personality determined basic things, like movement patterns or reaction to eye contact.  But in addition to research confirming personality influences, you also have a lot of views that personality tests are, well, rubbish.  For example, how can you test the personality of a teenager, who hasn’t even finished developing his brain?  Research shows the brain doesn’t finish developing until well into people’s 20’s, and people keep on growing and changing throughout their lives.  So what good is a personality test?  Also, people can fake their answers, shape them to what the employer may like, score inconsistently over time – and so on. 

But how bad are they, really?  This is a chance for you to find out (if you haven’t already tried before).  There are two tests you can take today.  One scores your personality according to the Myers-Briggs Type Indicator (MBTI®), and the other one scores according to the Big Five model.  They take a little time to do, particularly if you are doing them insincerely…

Once you have completed the tests and the scores and descriptions are available to you, have a read through them to see to what extent you feel like they have captured your personality.

You can also explore Jung Career IndicatorTM and see what types of career they suggest you choose based on your personality type.  How do you feel about them?

In any case…

Your workplace offers opportunities to interact with, how shall we put this, interesting personality types.  For example, you may find yourself with a narcissistic boss.  Narcissists seem charming, charismatic, and confident at first, so they can make their way into managerial and leading positions.  Later, you discover that they have an exaggerated sense of entitlement, that they require constant admiration, that they are quick to claim credit for others’ achievements, and to blame colleagues for their own failures.  They also care only about their own success, and they are willing to take advantage of others to get what they need.  All this makes them very difficult to work for.  If this happens to you, there are several strategies you can use to improve yourself while you work with them:

  • Learn from their successful behaviours
  • Be careful when you challenge them – their ego is fragile and hurting it will hurt you
  • Avoid gossip, particularly in an email
  • Regularly examine if staying is useful to you

Some issues to notice and pay particular attention to here are…

  • Participants’ experience during personality testing
  • Participants’ concurrence with the results of personality tests
  • Participants’ concurrence with suggested careers
  • Difference and similarities between the different personality testing tools
  • Employees’ personality aspects versus a holistic view of them
  • The effects of personality types on work outcomes

Consider the following questions for discussion…

  1. How did you feel during personality testing?  How would you feel if had to take one of these tests as part of a job recruitment process?  Would you keep your answers genuine?
  2. How did you feel about the results of the tests?  Did you agree with them?  Why or why not?
  3. Could you have achieved a different result if your answers were slightly different?  What do you think of the accuracy of these tests?
  4. How do you feel about the careers suggested to you?  Can you relate to any of these suggestions?
  5. How the two test results compare?  Which one would you prefer to use if you needed to recruit people to work with you?  Why?
  6. How close are your traits to those of the narcissistic manager?  How do you think working for a narcissistic manager would be?  
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Chapter 7: Innovating higher education in Australia and world-wide

To get cracking…

…revise pages 186-206 of Chapter 7 and really get your head around the theory in the text. Then, read this news article reporting on a government plan to use massive online open courses – or MOOCs – so that Australia can capture 10 percent of the world market in online education by 2025.  Let’s see how MOOCs ignited changes in the higher education industry.

So, to summarise…

International education is already an important part of the Australian economy.  In fact, it is the third largest industry in Australia, with a $19 billion revenue in 2015.  A recent estimate by Deloitte Access Economics suggests that by 2025, 1 billion students world-wide will be seeking online education.  Australia’s universities have a strong global reputation and relevant capabilities, so this opportunity was recognised by then International Education Minister Richard Colbeck, and former Trade Minister Andrew Robb, who put together a strategy to grow the Australian online education industry by… 21,900 percent.  No, this is not a typo.

One way to capture international students is with a MOOC.  It’s a bit like a free sample you get of a product, which then gets you to continue to buy it:  you do a free short course, see if you like it, and if you do, you can enrol in a full subject, get credit, or even get a whole degree with the education provider.

MOOCs have their own shortcomings. Their completion rates have been tiny (around 5% at many subjects) and there are stories of plagiarism, which reduce confidence in the accreditation they provide.  Also, it seemed like a lot of MOOCs were not very innovative, and therefore not very attractive: they were just online versions of traditional content delivery, which not very inspiring or engaging.  Actually, some of the non-elite universities did a better job than the famous ones.  Those universities have had to attract students not with their reputation but with their practices, and because of that they developed great online delivery practices over the last two decades.

Even with these problems, and even after the initial enthusiasm had passed, MOOCs continue to grow.  In Australia, many top universities now offer them:  Australian National University , Monash University and the University of Queensland are only a few examples.  MOOCs cover all sorts of topics, not only academic ones: for example, a MOOC on death and dying (which is something relevant to all of us, really) is now on offer.  Because there are now so many MOOCs offered, on so many different platforms, a new service allows you to find a MOOC on your topic of interest in the pool of MOOCs worldwide.

The MOOC industry is inspiring change in the higher education industry.  Massachusetts Institute of Technology (MIT), one of the world’s top universities, now allows you to take half of its masters degree practically for free.  Coursera is connecting universities directly to industry, by providing MOOCs on topics of interest to companies, such as corporate financial analysis.  More changes are expected, as students become more sophisticated in their ways of cheating in MOOC assessments.

No doubt, if you have not heard of MOOCs before, you will be hearing a lot more of them now!

 

Some issues to notice and pay particular attention to here are…

  • Categories of organisational change
  • Overcoming barriers to change
  • Stress
  • Innovation variables
  • Idea champions
  • Change agents

 

Consider the following questions for discussion…

Two main types of organisations mentioned in this post: universities and MOOC providers.  Which categories of change affecting each of them can you identify in this post?  Have a look at Figure 7.1

  1. Your textbook mentions a few causes of resistance to change 196-197.  Which ones do you expect to operate in each of the organisations mentioned? 
  2. The textbook also mentions techniques for overcoming resistance to change (pp. 197-198, and Table 7.1).  Which ones would you have employed in each organisation?
  3. How likely do you think the change in the organisation to result in employee stress?   Which of the techniques to reduce stress among staff suggested on pp. 200-201 would you think are the most appropriate?
  4. Which of the innovation variables presented in Figure 7.3 do you think are prominent in the organisations mentioned?  How would their presence (or absence) affect the change introduced by the rise of MOOCs?
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Chapter 6: Managing Human Resources: addressing harmful turnover

To start with…

…refresh your knowledge of human resource management, primarily on Figure 6.1 on p. 152, summarising the HRM process, pages 155 - 161 on selecting competent employees and pages 162 - 166 on strategies for retaining them.  Then, read a recent article describing the damaging effect of childcare workers’ turnover on children, and the reasons for it.

So, to summarise…

Children are our future!  After all, everyone used to be one.  In our society, it is very common to have both parents working, and there is not always extended family support, so the childcare industry has been rising in terms of costs and revenue.  This massive industry involves billions of dollars, and millions of families. 

Typically, the mission of childcare organisations is to provide children with a safe, age-appropriate environment, which allows children to learn, interact, and explore as they grow.   Usually, childcare centres pride themselves on the positive contribution they make to the development of children in their care. 

However, recent research shows that turnover in this sector is quite high:  about 205, which is 1 in 5 childcare workers, plan to leave.  The separation from a beloved childcare worker, who is practically a surrogate parent for a young child, can be very difficult for little children, and can also have a negative affect their development.  This is in clear contradistinction to the mission and goals of childcare organisations.  Managers of childcare centres now face a problem in their human resources, and that problem directly affects the quality of the service they provide.

What can HRM do in this case?  Actually, they can do a lot.  Let’s break it down to six broad categories: identify reasons, deal with new staff, deal with existing staff, address the problem at the job and organisational level, use retention strategies, and prepare for the future.

First, HR can find the reasons for turnover.  Many workplaces use exit interviews as a standard procedure to identify what made the employee resign, and do not require external researchers to give the answer.  In this case, an external researcher found that the main three reasons for turnover among childcare workers was pay, paperwork, and working conditions.

Then, once the reasons for leaving are identified, HRM can start addressing them before new workers join in.  In the stages of recruitment, selection, induction, HRM professionals can look for employees who can not only perform the core activities of childcare, but also handle the hardships that were too much for the workers who left.  One technique is a providing a realistic job preview, where new recruits get an understanding of what work would be like.

Besides getting new staff on board, the existing staff needs to be addressed: they were deemed suitable for the organisation, so the organisation can now help them stay.  Paperwork is a problem in many organisations.  Maybe further training and development need to be provided, so that working conditions can improve, and so that paperwork can be managed better?  Maybe there are opportunities for professional development which will address some of the problems?

HRM professionals can also address the problems at the organisational levels.  If pay is an issue, HRM can recommend to top management to revise it.  If the organisation’s competitive advantage is to have low staff turnover, it could afford to charge higher rates, or, in most cases, it will lose less money: recruiting, selecting, and inducting employees costs money too.  HRM professionals also have the tools to address the problems through job design, organisational structure, appraisal system, and knowledge sharing.  Perhaps paperwork can be separated from direct childcare, or time can be allocated to it?  Maybe the appraisal system can take paperwork into account, and motivate employees that way?  Maybe some workers have found strategies to incorporate paperwork into their work day, and those strategies can be shared?  

HRM professionals also have various strategies to encourage retention.  Incentives, mainly if they are tenure-related, can encourage workers to stay.  Other strategies include promotion and status (“senior carer”, “floor manager” and formal titles like these), and security.  Some jobs do not offer the best conditions or pay, but the security they offer is attractive to workers.  These are all ways HRM can help with retention.

Finally, HRM can help face this challenge, but other challenges will come.  HRM professionals need to find ways to identify those challenges before they become a problem, and address them.  HRM professionals can find ways for employees to voice their views, and to identify where the decision making can be made, at the top or closer to the workers. 

So there are many ways in which HRM professionals can contribute not only to the organisation they work in, but also to the customers, communities, and society as a whole.  On that optimistic note, let’s move onto the questions.

Some issues to notice and pay particular attention to here are…

  • Recruitment strategies
  • Retention strategies

Consider the following questions for discussion…

  1. How does turnover affect childcare organisations? Who are the likely affected parties, and how does it impact on the organisations?
  2. One strategy for reducing employee turnover is providing security in terms of continuous employment.  What are the risks of offering people permanent employment?  How would you, as a business manager, address them?
  3. Suppose you were told, as a manager of a childcare centre, that you need to retain as many of the current carers as possible.  How would you, as a manager, decide on which retention strategies to use?
  4. In your view, how would career development assist with the retention of childcare staff?  What career development opportunities could you offer them?
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Chapter 5: Forms of power in organisations

The Australian Federal elections have recently concluded with a bare majority for the Coalition.  This brings to light many political power exercises.  Although political parties are not exactly business firms, they are, based on our definition, organisations.  They are, after all, people who deliberately come together to accomplish some specific purpose. Let’s stretch our views of organisations with this example, and check out how power works.

http://www.businessinsider.com.au/australian-election-result-voters-put-political-establishment-on-notice-2016-7

power: between parties large parties and small parties

people have power to elect

 

Let’s get cracking…

…refamiliarise yourself with the content of Chapter 5 to arm yourself for this scenario.  Particularly, have a look at pages 123-125, which described different forms of power and authority, and pages 129 – 135 which describe common organisational structures. Then, make yourself familiar with the structure of the Liberal party, and on p. 6 of this document you can find a description of the structure of the Australian Labour Party.   As you read it, keep in mind the role of organisational structures, and forms of power used within and outside organisations.

Summarising very briefly:

The Australian political system is complex.  First, the Australian Constitution is the underlying description of the government’s rules and responsibilities.  Then, the Governor General, which is a representative of the Queen (but does not in fact subject to the direction, supervision or veto of the Queen or the British Government) has the power to summon and dissolve the parliament, set up Departments of State and appoint judges.  Then, we have the national government, which has two parts: the House of Representatives (also called the Lower House) and the Senate (also called the Upper House).  These ‘houses’ are responsible for setting the laws in Australia, and both of the houses have to approve laws before they become active.

Most of the time, The House of Representatives (the Lower House) suggests laws.  It has 148 elected members, each representing around 80,000 voters in an area called ‘an electorate’. The political party or parties with the most seats in the House of Representatives forms the Government.

The Senate (the Upper House) is known as the 'house of review' because it reviews the laws suggested by the House of Representatives.  It generally goes through proposed laws clause-by-clause and often refer them to committees. One of the Senate's original roles was to ensure that laws were fair to all states. For this reason, each state is represented by 12 elected Senators from each State and two Senators from each of Australia's two Territories.  If you are looking for something with a bit of a light-hearted approach, The ABC developed a comedy describing the realities of this structure called ‘The Hollowmen’. 

In federal elections, voters select representatives for both houses – Lower and Upper.  In the last elections, in July 2016, the outcome was quite interesting in terms of power distribution.    If one party had a majority of votes in both houses, things would have been fairly simple: that party would carry out its promises to the voters (as much as possible, considering reality) by proposing laws in the lower house, and approving them in the upper house.  But this is not the case this time.  No single party secured enough votes to do that, either in the lower or the upper house.  Instead, both large parties have to team up with smaller parties to get things.

The smaller, independent parties have hit a record high votes.  There is a view that this record is a sign that Australia has joined a global trend of disillusion of the established political order.  Other views focus on local issues, like Queensland’s disillusion from its political figures and high unemployment rates in South Australia.  Either way, looks like the newly elected Coalition will struggle to pass laws despite their majority in the lower house, because they lack a majority in the upper house. For this reason, the Coalition leader, Malcolm Turnbull, said he will be seeking consensus with the opposite big party, Labour, on legislative issues.  What this means, is that the Coalition is not confident that they can pass laws without the agreement of their counterparts.

Governments cannot afford to sit back and not pass any laws:  the federal budget, for example, is something that has to be organised and agreed upon every year.  To get the budget through, both houses have to approve it.  To get houses to approve it, parties often negotiate with other parties.  The leading party could, for example, give an independent party something they want, in return for their vote for the budget.  And example would be giving a party the “the cyclist party” a budget item to pave more bicycle paths, in return for passing a budget that cuts back on funds for education.  Other ways to convince parties to pass laws is to describe to the media what they are doing.  For example, the Coalition could tell the media that a party like “One Nation” is refusing to support a budget which will secure the future of the Australian economy, because it includes funding for refugee rehabilitation.  This could create pressure on the independent party to pass the budget, because its voters may favour the Australian economy in general.

In traditional democracy, parties negotiate and strike deals based on their own interests, and the public votes for them with the expectation that those interests will be consistent with their pre-election promises.  However, with the rise of social media and the internet in general, a different concept has been growing worldwide.  Voteflux registered as a party in the last elections, and it offers basically to hold an ‘election’ every time there is a decision to be made.  Voters say online how they would like to vote for every single decision, and that way, it is no longer up to politicians to make deals, but up to the voters to find out, vote, and take responsibility for every decision.  Who knows, maybe this is the new step in democracy?

Consider the following questions for discussion:

  1. Several entities are involved in this story – large political parties, small political parties, the Australian voters etc.  What sort of a structure do you think each entity would have?  How could have their structure supported their operations?
  2. What forms of power can you identify in this story?
  3. What kind of power are used by for political actions? What kind of power do you think is the most effective, and why?
  4. What kind of power do individual citizens have in this case?  What is the effect that VoteFlux has on this answer?
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Chapter 4: Planning – in this day and age?

Let’s get cracking…

…by reading back over the content on planning in Chapter 4 of the textbook.  Once you’re done, you should have a pretty good understanding of the various tools and processes available to you for planning.  Now let’s see how well it works when others plan.

Summarising very briefly:

With rising awareness of global wealth inequality, with the richest 20% in Australia earning five times as much as the poorest 20%, and with the US experiencing an even worse gap, this inequality is now a recognised problem.  Evidence suggests that wealth and income inequality are dangerous for economic stability and prosperity, and if you get a chance to view this entertaining and informative documentary, you will get a good idea of how the two are linked. 

Recently, the OECD published a report exampling how reducing wealth inequality benefits everyone.  In the same spirit, the International Monetary Fund published a game-changing report about two years ago, saying that increasing the income share of the poor and the middle class actually increases economic growth, and that increasing the income share of the top 20% results in lower growth.  While economic growth may not be the best thing anyway, wealth inequality is worth tackling because of its many other negative effects

One way to reduce inequality is resorting to sharing economies.  You would have been part of some form of sharing economy, where you became aware of available resources which you could use: sharing money to fund projects you believe in through crowdfunding websites, booking accommodation through AirBnB, and maybe sharing transportation with Lyft or Uber.

Trip-sharing sounds like a win-win-win:  the driver gets someone to chip in for the trip, the passenger gets a ride that is cheaper than a taxi and the planet gets less carbon emissions.  But of course, things are more complex than they seem. There have been many criticisms of Uber’s model, including the conditions of the drivers compared to traditional taxi drivers and the uncertainty around passengers’ safety.  Still, Uber is growing in popularity and even has competition, so the company must be onto a good thing.

Uber has recently expanded its model from transportation of passengers into food deliver, with UberEats, and now plan to expand to the UK.  Despite existing competition of companies like Deliveroo, Uber is recruiting bicycle and moped drivers, partners with restaurants, and gets ready to move in. 

Deliveroo could get nervous about the upcoming competitions, but instead, their CEO explains that they focus on restaurants and motorcycle and have no problem with other companies looking at other niches. 

One thing is certain: competition is a certainty in any business, and uncertainty is a constant.  Planning in these conditions is very challenging and may require a Chrystal ball...

 

Consider the following questions for discussion…

  1. From the post, what types of planning is Uber engaging in at this stage?  What about Deliveroo?  What type of planning would you recommend for them?
  2. From the post, what goals can you identify? Which are the stated goals and which are the real goals? Based on what can you tell them apart?
  3. What elements of strategic planning are evident in the article? What elements are missing? How would you, as strategic manager in Uber or Deliveroo, use these missing elements?
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Chapter 3: Decision making. No, it will not get simpler.

Let’s get cracking…

…by reading back over the content on decision making in Chapter 3 of the textbook.  Once you’re done, you should be fully equipped to deal with a simple problem called “world climate change”.  Easy! Right?...

Summarising very briefly:

Before you start reading this, quickly record your views on climate change: Is it happening? Is it bad? Who should act on it? Keep these records for the end of the reading piece.

Last week we looked at how climate change affects one of our most precious natural reserves.  This week, we are looking at our own little circle of influence and what we can do about it.  But first, is climate change really happening or is it just an over-reaction?

News about climate change is getting worse and worse.  2015 was the hottest year on record. You can have a look at a good graphic representation of this trend.  For decades now scientists have been warning us that the industrialisation and automation of the world has caused our climate to change and temperatures to rise.  This warning has been met with strong opposition, arguing that the climate change, if occurring, is not a result of man-made actions.

It’s not easy make up one’s mind about the whole issue of climate change.  Evidence, even if clear to scientists, is not always clear to the common person.  Have a look at the temperature charts.  Does it seem like global warming is here?  Now look at the chart that describes the various components that contribute to climate change.  What is the main contributor to climate change?

So the scientific community generally agrees on the trend of global climate change and its causes (human greenhouse gas emissions).  Scientists are the backbone of the academic world so you would expect that universities, where science has freedom, power and respect, would do what they can to address climate change. 

What could universities do?  They are already tracking temperature records, working hard on developing technological solutions for clean energy and teaching degrees which advance environmental goals.  There is even a union of scientists who use their scientific skills to ‘build a healthier planet and a safer world’.  What else can universities do?

Like other big organisations, universities run their own investments.  Many of those investments are managed by external funds and they often include at least some fossil fuel based investments.  There are two types of reasons why universities would divest from such companies: financial reasons and ethical reasons.   

From a financial point of view, companies that rely on fossil fuel seem to be at a great risk.  Recently, one of the biggest coal companies filed for bankruptcy protection to avoid shutting down for good.  From an ethical perspective, if universities invest in fossil-fuel companies, then they basically ‘bet’ on these companies’ success and endorse their actions.  The fossil fuel industry actively acts to block action on climate change by funding many sources of misinformation about climate change and lobbying against such action.  So if universities invest in these companies, they get involved in these unethical practices.  Universities are meant to be forward-looking institutions, focused on educating people and producing research in order to create a better future.  Universities would be expected to take action based on a long-term vision for the world.

Indeed, Australian universities have been gradually divesting from fossil fuels.  ANU led the way in 2014, and the University of Sydney followed a year later.  La Trobe University has also announced that it will completely divest from fossil fuels.  Other universities have these campaigns running too.   If your university isn’t one of them, maybe you can be the leader of this cause.

The decision to invest (or divest) is not really up to you as a student, but you can make a difference if you join forces with others.  A recent movement called 350.org started a campaign among Australian universities, requesting their divestment from fossil fuel companies.  They organise university members to ask for their institution to disclose to its staff and student members the university’s current investments in the fossil fuels industry, and to divest from fossil fuel companies.

Now clear your mind, take a few deep breaths, and think: If you had to answer the questions presented at the beginning all over again – is climate change happening? Is it bad?  Should Australian universities act on it?  Should you? – What would your intuitive answer be now?

 

Consider the following questions for discussion…

  1. This will be easy to answer, but you will surprised how often this issue is overlooked in managerial discussion: is the climate change question structured, or unstructured problem?
  2. Why would bounded rationality play a part in how people normally consider the climate change issue?
  3. Most climate change issues are discussed in group forum – at least among policy makers.  It makes sense to solve a global problem within a global forum.  What kind of problems, biases, and benefits does this group setting bring to this problem?
  4. If you were the manager of a university’s investments, and 350.org approached you and asked you to divest from fossil fuel companies, how would you approach that decision?  What considerations would guide you and how would they relate to the decision making process in Figure 3.1?
  5. What kind of biases listed in Figure 3.2 do you think affect university investment managers?  How would they affect you if you were one of the managers?
  6. It may be tempting to follow the rational decision-making approach to every problem you encounter as a manager, but keep in mind realistic conditions that are similar to those in managerial workplaces: time pressure, tasks overload, and multiple stakeholders.  How would you address this problem?  
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Chapter 2: The External Management Environment – The Seekers

To start with…

…refresh your knowledge of the various factors in the external environment that managers should be aware of as part of their job. Figures 2.1 (p. 30) and 2.2 (p. 32) in your textbook describe these in detail, so you should definitely have a closer look at them before sinking your teeth into this case.  Once you’ve done that, check out this story of a recent UNESCO report on tourism and climate change and the omission of a section on the Great Barrier Reef.

So, to summarise…

We have recently seen widespread bleaching events in the Great Barrier Reef, unprecedented in scale and severity.  More than half the reef has been ‘severely bleached’, which means it is at high risk of dying.  These bleaching events come at a sensitive point in time: just before UNESCO released its 2016 report of World Heritage and Tourism in a Changing Climate, and just as campaigning for the Australian Federal Government election is peaking. 

The United Nations Educational, Scientific and Cultural Organization (UNESCO) is a global organisation, and focuses on global issues.  Formed in 1945, after two world wars, it strives to promote global peace, interconnection, cooperation and understanding.  It has a list of World Heritage sites of cultural or natural importance to humanity.  The Great Barrier Reef was added to the list in 1981 and has become one of the world’s most important coastal and marine tourism areas. 

The reef means a lot to humanity and to Australia.  Besides being marvellous and inspiring, it is a major focus of tourism in Australia.  Activities including touring, diving, sailing, fishing and cruising, collectively make about 90% of the total jobs in their local communities (64,000 jobs), contributing $5.2bn dollars to the Australian economy.  But tourism is a double-edged sword: yes, it motivates Australia to take good care of the reef, but the infrastructure required for tourism can also damage it.

As you would expect, tourism infrastructure around the reef (like roads, buildings and boats) are restricted by regulations meant to protect it.  But a bigger danger to the reef, and probably the biggest long-term threat to its ecosystems services, biodiversity, heritage values and tourism economy is climate change, including rising sea temperatures, accelerating rates of sea level rise, changing weather patterns and ocean acidification.  As the the water temperature rises, coral reefs around the world are suffering, and the Great Barrier Reef has been assessed as poor and deteriorating.  You would think UNESCO would want to encourage quick action to save the reef!

But UNESCO complied with the request of the Australian Government to drop any mention of Australia and the Great Barrier Reef from its recent report “World Heritage and Tourism in Changing Climate”.  The Australian Government did not want the report to impact on … tourism to the Great Barrier Reef.  Other organisations in Cairns are concerned with reducing tourism, and make their own efforts to address the poor image of the reef.  For example, Tour operator Quicksilver has been providing Reef Health Updates featuring a marine biologist who claims that as the water cools through winter, many of the coral are likely to regain their colour. Regional tourism organisation Tourism Tropical North Queensland has also begun a campaign to showcase undamaged parts of the reef.

On the other hand, the report to UNESCO was developed in collaboration with the Union of Concerned Scientists (UCS) published the full version of the report, which includes relevant sections about the Great Barrier Reef and discusses this whole issue in the media.  Each of these organisations is very concerned with various aspects of the external environment, which gives us a perfect opportunity to study this concept comprehensively.

Some issues to notice and pay particular attention to here are…

  • The effects of the environment on organisation
  • The external environment of the organisation
  • Customer responsiveness
  • Managerial responses

Consider the following questions for discussion…

  1. Figure 2.1 on page 30 describes the organisation through a system view.  How would you describe the elements which are relevant to UNESCO?  To the Australia Government? And the Union of Concerned Scientists?
  2. Figure 2.2 on page 32 of your textbook lists the elements of the organisation’s specific environment, and describes them in detail on pages 39-43.  If you were a manager in UNESCO, the Australia Government, or the Union of Concerned Scientists, to which of these elements would you be particularly attuned these days?  Why?  How would they affect your daily work?
  3. What businesses and organisations are affected by condition of the of the Great Barrier Reef?  Who would be the customers to consider?
  4. How would you, as a manager of a business that is strongly affected by the condition of the Great Barrier Reef, prepare for the predictions of its deterioration?
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Chapter 1: Managers and management: changing roles

To start with…

…refresh your knowledge of managers’ titles on page 6 and managerial roles on pages 8 to 11 of the textbook.  Then check out a recent decision by the ACCC.  Organisations of many shapes and sizes are involved, so we have an opportunity to take a closer look.

So, to summarise…

Different organisations have different goals, and managers are the ones who translate those goals into employees’ actions.  In this week’s story we’ll examine three different types of organisations: a for-profit business, an independent Commonwealth authority and the government.  

The story features two main organisations: The Australian Competition and Consumer Commission (ACCC) and Careers Australia.  ACCC has examined the operation of Careers Australia, deemed it illegal, and ordered it to amend the damages it has caused.  That’s the simple story.

The ACCC is basically part of the Australian governmental structure (although it is independent of the federal government).  It aims to “enforce the Competition and Consumer Act 2010 and a range of additional legislation, promoting competition, fair trading and regulating national infrastructure for the benefit of all Australians.”  This means that the ACCC often represents and fights for individual consumers against large (or small) organisations, which can be driven by greed or other considerations.  You can tell from this description that the ACCC shows a few things about the organisations’ goals  and what managers would prioritise.

In contrast, we have Careers Australia, a private provider of vocational education and training, operates in a different environment.  It competes against other providers of non-academic education, and, like most private organisations, aims to make a profit.  But profit alone cannot be a motivator (we will learn more about this when we study about motivation).  Notice how Careers Australia doesn’t actually specify its vision or mission in its description of itself.  This leaves the public in the dark with regards to the company’s motivation and direction, and perhaps the employees too.

Careers Australia is in the business of enrolling students into practical courses, and it does so by sending agents door-to-door.  Now, the system in Australia allows citizens to enrol in such courses and not pay for them directly, but have the tuition as debt.  They later pay the debt once they get employed, as part of their tax.  That’s what the higher level education and training scheme (VET FEE-HELP) is all about.  So basically, Careers Australia could enrol students without them actually paying anything, which is not a hard sell.  So that’s what they did.  Between 1 August 2013 and 31 March 2015, Careers Australia received and processed applications from around 40,000 students for enrolments into its VET FEE-HELP courses.  If you keep in mind that each course can cost about $10,000 on average, that is a lot of money.  Indeed, Careers Australia received about $190 million from the Commonwealth for these students.

The problem was that sales people may have been too eager to close the deal and did not fully explain the debt issue.  Yes, the debt may be paid in full with a marginal tax rate after you get a job, but what happens if you don’t get a job?  Careers Australia representatives made it sound like a job is guaranteed once their courses are complete, but we all know that qualifications alone are not enough to secure employment.  Also, many students were not really serious about their studies, and did not complete their courses.  Still, they were enrolled, Careers Australia got the money for their fees, and the students ended up with the debt.

The ACCC was approached about this problem and found that Careers Australia did not operate according to the law.  It therefore ordered Careers Australia to remedy the situation.  In response, Careers Australia cancelled at least 12,130 of these student enrolments and either repaid or partially repaid to the Commonwealth amounts totalling at least $44.3 million, including cancellations made in the course of the ACCC investigation.  They have also taken the following steps:

  • informed students on its website and at its 15 campuses across Australia about the potential availability of having their enrolment and debt cancelled
  • implemented an ACL Compliance Program, including training for staff and regular reviews, and
  • not engaged in the conduct of concern in the future.

Careers Australia were not the only organisation in their industry to be examined by the ACCC.  The ACCC has also taken action in the Federal Court against four other private colleges:

 

Australian consumers are very lucky to have such a strong and dedicated body on their side.  Such actions send a clear message to businesses country-wide: take consumers into account, be fair, and comply with the laws.  Consumers are not helpless and misconduct will be held liable!

Some issues to notice and pay particular attention to here are…

  • Three characteristics of organisation
  • Managerial titles
  • Managerial functions
  • Managerial skills

Consider the following questions for discussion…

  1. There are two different types of organisations involved in story.  Identify them, and identify how they would vary across the three characteristics of organisations described in Figure 1.1, on p. 5.
  2. Identify the titles of managers who would be involved directly, and indirectly, in the actions of the organisations you’ve identified in the previous question.
  3. Think of the four management functions (p. 8-9).  How would the managers in each type of the organisations you’ve identified in question 1 address each of these functions when they operate to achieve their goals?
  4. Have a look at the managerial skills listed on page 11.  How would these skills be used by the different managers in the different organisations you’ve identified?
  5. How do you think managers across titles failed to identify the problem in Careers Australia’s conduct?  In your view, what should they have done?
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Foundations of control

To get started…

… Refresh your memory on the issues relevant to control on pp. 361 - 367, such as what takes place as managers control, how actual performance is compared with planned performance, what actions managers take, and when control takes place.  Then read the report on ANAO’s audit of Defence’s management of credit cards.  The full report can be found here.

So, to summarise…

The Australian National Audit Office (ANAO) is a specialist public sector practice that provides the Parliament with an independent assessment of selected areas of public administration and assurance about public sector financial reporting, administration and accountability.  ANAO does this primarily by conducting performance audits, financial statement audits and assurance reviews.

A recent report ANAO published examined whether Defence is effective in controlling the use of national credit cards for official purposes, and if they manage that use in accordance with legislative and policy requirements.  Defence issues credit cards for its staff, allowing them to make purchases and payments for goods and services required as part of their job.  For example, Defence staff use them for travel, fuel, and taxi fares.

To manage risk of fraud and misuse, Defence developed formal reporting procedures.  How well do these procedures work?  That’s exactly what the audit was trying to find out.  The audit found that some controls which were meant to prevent fraud or misuse were not applied consistently, or were not even implemented at all.  In addition, some controls that were meant to detect fraud or misuse (like reviews of transactions) were not used effectively, and therefore were not as effective as they could be. 

Other problems identified by ANAO include people still holding on to their cards (and the access those cards give) after their circumstances change.  For example, if someone retires, moves, changes roles, etc., and they are no longer entitled to the card or its benefits, they may still retain those privileges for a while.  Some controls suggested for this form of problems include quality assurance (QA) checks and data analysis, annual audit of cardholders, and monthly reconciliations reports, which match purchase approvals with credit card bills.

Another problem identified in the audit is potential internal fraud, where the supervisor (who is supposed to approve appropriate purchases) actually co-conspires with their subordinate, and approves inappropriate use.  For this, ANAO suggested a two-person approval to make misuse more difficult and also longer, more resource-intensive and time consuming.  Think, for example, of situations where the policy requires double, or even triple confirmation, like when you make an over-the-phone transaction with your bank.  Sometimes you need to put in the same password twice, or even three times.  Now imagine the same thing, but on a scale of more than 100,000 transactions a year, with more than 5,000 individuals involved.

ANAO made specific recommendations, mostly requiring Defence to identify risks and to implement controls which will be consistent and applicable throughout the entire organisation.  Defence agreed on all of those recommendations.

Usually, when one organisation audits another, the recommendations are made in consultation.  It increases the chances of those recommendations actually being implemented effectively.  Also, the audited organisation usually knows best about what is feasible and what the limitations of every solution are.  Based on the agreement to implement all recommendation, it is very likely that the same consultative approach was used in this case too.

Some issues to notice and pay particular attention to here are…

  • What to measure
  • Correcting actual performance
  • When control takes place

Consider the following questions for discussion…

  1. What elements relevant to control can you identify in the report?  Refer to Figure 13.4 on p. 358.  When should control take place for each of these elements?
  2. What kinds of measures used by the Defence are mentioned in the report?  Why do you think these types are predominant, and not others?
  3. What kind of measures would you use if you were in charge of the upcoming reform?
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Communication and Interpersonal Skills: Negotiations

To get started…

Refresh your memory on the various barriers to communication mentioned in your textbook on pages 338-340 to see why it is important to find effective methods of communication and how managers can overcome barriers to communication.  Check out how managers should communicate when negotiating on pages 347-349.  Then read the negotiations advice given by Richard Mullender, a former hostage negotiator of the UK police force.

So, to summarise…

Plenty of movies and TV shows feature hostage negotiations, giving us some idea of what the hostage negotiator job entails.  The purpose of the entertainment industry, however, is exactly that – to entertain.  Richard Mullender gives an insight into how things are done in reality. 

Mullender places a strong emphasis on all three principles of addressing barriers to effective communication: active listening, feedback, and simplified language.  His number one goal is to understand the other party.  This is done by interpreting back to the speaker how you understood what they said, using the words “I feel as if….” or “it seems to me that …”  When you start that way, you do not change the subject (which leaves the speaker in control of the conversation), you communicate back to them what came across to you, and you open it up for their feedback.  If you are correct, says Mullender, they will agree with you and expand, and if you are wrong, they will correct you and expand.  In both cases, you will get a better understanding of them.

Mullender also gives advice on the physical seating arrangements and body language during negotiations: not face-to-face, but on a slight angle and breaking eye contact every five minutes.  Mullender explains that this reduces the levels of intimidation while communicating an appropriate level of interest. 

In addition to what to do during negotiations, there’s some advice on how to prepare for negotiations.  Three points of advice from a Harvard Business School professor Deepak Malhotra concern this preparation, particularly for hard negotiations.  When you know this is not going to be easy to solve because the differences are not small or the counterpart is hard to convince.  The key is not being tough or aggressive suggests Malhotra.  The first step is to identify the rules, players, and parameters.  It is not a weakness to ask all these questions is advance: who is responsible for making the final decision?  Are they participating in the negotiation?  What about the timeline and benchmarks?  Try to get an accurate assessment of where the other side is truly constrained and where there's room to move.

The second point is to call it what it is – acknowledge the tension and suggest a break when it gets unbearable.  The final point is about self-care.  Basically, it raises the importance of staying balanced and unaffected by whatever unsettling technique of the opposite side.

Some people think that women should negotiate differently to men.  When negotiating for a raise, women are advised to not appear weak, be prepared to compromise for other forms of benefits (like time off), be aware of the company’s circumstances and appear positive.  Would men be given the same advice?  Perhaps.  And perhaps this sort of advice, given to women to maintain a meek position in their workplace, reinforces the gender pay gap and knowing what the colleagues earn can help with closing it.

Some issues to notice and pay particular attention to here are…

  • Barriers to communication
  • Ways to overcome barriers to effective communication
  • Negotiations

Consider the following questions for discussion…

  1. What barriers to communication would disrupt good outcomes in negotiations?  How would you overcome them?  Why?
  2. If you were to engage in negotiations with your manager about raising your salary, how would you prepare for it?    
  3. Do you think women and men should negotiate differently?  Why or why not?
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