ITB 2024 Special Reporting
Optimizing The Human Dimension: The Great Unknown Variable.
By Dietmar Kielnhofer Ph.D
Monday, 19th December 2011
Millions of decisions are made each day by employees; through the decentralisation of organisations, most decisions are now made at the lowest level of hierarchy.

Management evolution shows how far we have come in the learning process in improving productivity. To develop employees to accept more responsibility, managers must learn to be courageous enough to relinquish some level of control and share power and authority to enable their direct reports to accomplish their assignments more effectively. Managerial excellence is often measured from a standpoint of how effectively and efficiently they are able to achieve their organisational objectives.

Managers are currently in a state of metamorphosis; they must abandon their past identity and habits and acquire skills of wisdom to transform their experience and knowledge into a new process of learning – the birth of the transformational manager.  Knowledge becomes worthless if it is not communicated at all levels of an organisation. 

Focus will shift increasingly to managers who feel comfortable working in a multi cultural environments that stress result delivery whilst preserving team diversity and racial harmony. Classic examples are Singapore, Kuala Lumpur and Hong Kong that comprise a heterogeneous society of Chinese, Indians, Malays and Caucasian expatriates.

In an environment of mounting competition, increasing customer demands, changing technology, tight deadlines, budget constraints and the pressure of bottom line performance, managers often become so task driven that they tend to forget the importance of developing their employees, and above all, provide a superior level of service.

Employees must be trained to improve continuously on their performance through self-correction; they must learn to work independently. What is practiced in Japan under Kaizen, (constant improvements) made Toyota a world class company and the envy of the American automobile industry.

The differences manifest themselves in two vaguely discernable organisations: that of a marketing driven company and an organisational driven company. This is not meant to be a narrow and conclusive study that only two forms of company philosophies exist however. One can perfectly attribute one, or several operational characteristics to either company - they are NOT mutually exclusive but rather complimentary.

If a company outperforms its competitors, who have the same cutting edge technology and R & D focus then we could argue it has succeeded in developing its employees to higher degree of allegiance and commitment. To allow employees to grow professionally and intellectually, managers must learn to empower people to take action whenever they deem it necessary without seeking prior permission from their respective supervisors.

This means that managers must remove as many barriers as possible to enable their associates to act without restriction and fear.  Managers must learn to trust their subordinates and support them with the necessary experience, maturity, professional skill and track record to take action and to make decisions on their own; taken for granted in many western societies where management layers and barriers to decision making are at a minimum. This is still a sensitive subject in Asia where business owners often have a centralised view of where the final decision rests.

The relationship between employer and employee can be conceptualized as an exchange. The employer provides rewards, salary, benefits and opportunities, the employee in return provides access to resources in the form of skills, specialised information and time and performance commitment. This social contract, as I prefer to call it, is essentially a set of expectations. The employee has a set of results that he expects from the organization, results that will satisfy his needs, in return for which he will expend some of his energy and talent. Similarly the organization has its set of expectation and its list of outcomes that it will honour for services rendered.

What management must learn from this symbiotic realtionship is that most individuals belong to more than one kind of organization, they have multiple social contracts, loyalty and commitment is not exclusive.  A contract, which is not perceived identically by both parties, becomes the source of dissatisfaction, conflict or litigation. The macho management style of Albert Dunlop (a.k.a. Chainsaw Al or Rambo in Pinstripes) and Jack Welch (Neutron Jack) of the 80's and 90's is passé. What this millennium requires are managers who understand the emotional needs of their workforce. Leaders who have an education in liberal arts and the humanities coupled with solid business acumen thus balancing a rational approach with emotional intelligence to problem solving. Through their actions and behaviour they will demonstrate a better understanding of what motivates employees; they manage with heart and soul as well as with their head. If managers could operate more freely this would result in a better bottom line and higher guest satisfaction.

The rate and speed a company brings its products to the market will determine the long-term viability (and survival) of a company.  Most of the work of the future will be performed by a pool of highly trained professionals without a direct link to the organisation. Their work responsibility will be outsourced and their allegiance will be with a different organisation. Companies have to renegotiate the social contract with their associates and examine loyalty and ownership that will be based on a quid pro quo relationship.

These managers will assume a dual position; that of an inspirational and transformational leader as well as a managerial role in their respective functional discipline. In return they will be highly compensated and well rewarded for their commitment. Compensation will be based on market share gains and long-term share value appreciation - five to ten years - instead of focusing on quarterly results (more on this subject later). Ultimately, the long-term prosperity of a company becomes a central concern. Does this sound utopian?

Classic examples are software and credit card companies in the west that have outsourced their (expensive) labour intensive operations to the Indian subcontinent.

Infosys, the Bangalore based IT services company is a case in point that thrives on its business model that was based on providing services to companies based in the USA and Europe. Hotel companies in Europe and Australia are at the forefront in outsourcing functional expertise such as IT services, specialised maintenance contracts, security, housekeeping, cleaning and even catering services.  It is quite common to have celebrity chefs like Gordon Ramsey and Jean-George Vongerichten associated with international hotel chains – all in order to reduce overheads, increase operating margins and raise the profile and image of a hotel or restaurant.

This symbiotic relationship becomes a win-win situation for both parties. Hotels concentrate on their core competency, selling rooms and catering facilities and maximising yield whilst keeping expenses at a minimum. In order to meet these news demands on managers educational and training institutions will have to shift their focus from a one dimensional educational system, to a differentiated, more specialised, field of education reflecting the increasing trend of conducting business in a flat world – to borrow a term coined by Thomas Friedman.

Traditionally, US Universities favoured in their curriculum a multi national company approach to conducting business in different geographic locations.  Whilst this model had its advantages in an environment that stresses "think global and act local", it does not prepare executives for the rigour (and inevitably frustration) of conducting business in developing or emerging destinations. It is often said India is the service industry of the world and China is the manufacturing destination of the world.

So how well do American business schools prepare their executives to live, lead and conduct business in these flourishing economies? Unless leading universities adapt to the changing business paradigm they loose their reputation and / or become irrelevant. As a consequence the dominance of US business schools and MBA programs will wane unless teaching methodologies and the syllabus is redesigned to reflect the changing business climate and changing consumer trends.

Having access to a well educated labour pool is frequently cited as competitive advantage. A work force that lacks the basic understanding of key science subjects such chemistry, biology, physics and math is doomed to fail.

The author of this article lives in Tokyo and works as a General Manager for a multi national company headquartered in New York that is listed on the New York Stock Exchange. The thoughts expressed in this article are those of the author only. The author can be contacted under kielnhofer@Yahoo.com
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