Communications: Compliance


Compliance results through a power relationship between the participants in the communications process. That is, a receiver complies with persuasive efforts of the source because the source has the power, legitimate or otherwise, to administrator rewards or punishments.

Because the powerful source controls rewards and punishments, he or she can often induce compliance to his or her advocated position. However, compliance is relatively superficial in the sense that a compliant individual does what he or she is forced to do and does not necessarily adopt the complied-to position as a matter of personal desire or preference.

Sales representatives sometimes possesses a degree of power over buyers, especially in a seller’s market where demand exceeds supply and buyers are dependent on their vendors for supplies of raw materials, parts, or merchandise. Purchasing personnel may feel that if they do not comply with a sales representative’s requests, their orders may be delayed or cut off completely.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

National Sovereignty and Corporate Power


Multinational corporations present real challenges to a nation’s sovereignty and independence. The national sovereignty principle holds that a nation is a sovereign state whose laws, customs, and regulations must be respected. It means that a national government has the right, power, and authority to create laws, rules, and regulations regarding business conducted within its borders.

The second principle that shapes business-government relations in most countries is the business legitimacy principle. This principle holds that a company’s behavior is legitimate if it complies with the laws of the nation and responds to the expectations of its stakeholders. In theory, the principles of national sovereignty and business legitimacy are not in conflict.

As multinational corporations reach across national borders, their global operations may exceed the regulatory influence of national governments. This has raised concerns about the emergence of stateless corporation. These corporations have facilities, shareholders, and customers everywhere. Therefore, they seem to owe loyalty to no single nation and are able to organize and recognize around the globe. There are economic and political advantages to being, or appearing to be, stateless.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Regulation, Deregulation


Regulation is the increase or expansion of government regulation, especially in areas where the regulatory activities had previously been reduced. Deregulation is the removal or scaling down of regulatory authority and regulatory activities of government.

There is legitimate need for government regulation in modern economies, but regulation is not without its problems. Businesses feel these problems first-hand, often because the regulations directly affect the cost of products and the freedom of managers to design their business operations. In the modern economy, there are serious issues of regulatory cost and effectiveness that cannot be overlooked.

The call for regulation may seem irresistible to government leaders and officials, but there are always costs to regulation. In recent years, more attention has been given to the costs of government regulation. An old economy adage says, “There is no free lunch. Someone equally has to pay for the benefits created.” This is the rule of cost, and it applies in all socio-economic systems, whether free market or central state control.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Bases of Power


There are mainly five bases of power in organizations.

  • Legitimate power exists when one person believes that it is right for another to give orders or otherwise exercise authority.
  • Reward power is based on one person’s ability to administer desired outcomes to another and to remove those outcomes that are not desired.
  • Coercive power is based on a person’s ability to affect the punishment that another receives.
  • Referent power is derived from feelings of identity or oneness, that one person has with another, or from the desire for that identity.
  • Expert power is based on one person’s perception that another has needed knowledge, skills, or perspectives in a given area.

Although managers use all these bases of power, some are generally more effective than others, for instance, managers who rely on coercive power are likely to anger and alienate those they coerce. Such managers will encounter secret rebellion. Similarly, those who regularly “pull rank” demanding obedience simply because of their position in the hierarchy, may face resentment and begrudging acceptance.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Managing Cultural Change


When management acts to focus explicit structures, work design, staffing and development, and performance system/rewards on desired changes, the combined impact can be tremendous. Through management action, the culture can be changed to support the business strategy. Management communication of the company mission, vision, values, and strategic objectives is only the first step in the process.

Top executives must promulgate a vision; however, a brilliant vision statement won’t budge a culture unless it is backed up by action. The management system has to be put in place, and then management has to live by it. Culture is not something managers set out to change directly; rather, it is an outcome of consistent, positive management action, every day and in every way. Too often good strategic ideas and directions are translated too narrowly into plans. There are many examples, including quality of work life, participative management, quality circles, and service excellence. Even broadly conceived total quality management efforts risk faltering because they are being implemented as programs, rather than as broad, deep, multi-faceted activities.

The problem is not the association of an idea, with a program, but rather the existence of too few programs expressing the idea. Changes take hold when they are reflected in multiple concrete manifestations throughout the organization. It is when the structures surrounding a change also change to support it that we say a change is institutionalized—that it is now part of legitimate and ongoing practice, infused with value and supported by other aspects of the system.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Principals for Defining Privacy Policy


Companies wishing to enact an internal privacy policy or code should consider as a starting point the three concepts that help define information privacy: data collection, data accuracy, and data confidentiality.

Data Collection: the following principles should be adhered to:

  • Data should be collected on individuals only to accomplish a legitimate business objective.
  • Data should be adequate, relevant, and not excessive in relation to the business objective.
  • Data should be obtained in a lawful manner.
  • Individuals must give their consent before data pertaining to them can be gathered. Such consent may be implied from the individual’s actions (e.g., when they apply for credit, insurance, or employment).

Data accuracy: to ensure that misleading information will not be distributed, the following principles apply:

  • Sensitive data gathered on individuals should be verified before it is entered in database.
  • Data should be accurate and, when necessary, kept up to date.
  • The file should be made available so the individual can ensure that the data is correct.
  • If there is disagreement about the accuracy of the data, the individual’s version should be noted and included in any disclosures of the file.

Data Confidentiality: the privacy policy should ensure confidentiality as follows:

  • Computer security procedures should be implemented to provide reasonable assurance against the unauthorized disclosure of data. These procedures should include physical, technical, and administrative security measures.
  • Third parties should not be given access to data without the individual’s knowledge or permission, except as required by law.
  • Disclosures of data, other than the most routine, should be noted and maintained for as long as the data is maintained.
  • Data should not be disclosed for reasons incompatible with the business objective for which it was collected.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, and my Lectures.

Managing a Shortage


In the real world, equilibrium prices are always changing. A flood in Brazil may cause the price of coffee to rise; good farming weather in the Midwest will lead to a fall in the price of wheat; advancing technology steadily lowers the price of computers. If enough people are drastically affected by the price change the government may decide to do something about it—whether wisely or unwisely. Rising apartment rents will lead to pressure for rent control, falling wheat prices will lead to pressure for agricultural price supports, and so forth.

When the government controls the price of a good below the market-clearing level, there will be a “shortage.” A shortage is not the same as scarcity. Scarcity simply means that not all desires can be satisfied, and so scarcity is always present. Diamonds are scarce, but there is no shortage—anyone who can pay the price of a diamond can buy one. A shortage exists when goods are not just expensive but unavailable to some people—except perhaps by unlawful means. In a city with rent controls, newcomers may be unable to rent an apartment at all, regardless of their willingness to pay. Thus, faced with a supply shift or demand shift dictating a higher equilibrium price, consumers are bound to lose out one way or the other—either from the higher price if the market adjustment proceeds unimpeded, or from the “shortages” that follow when government interventions keep the price low.

Using the concepts of short-run and long-run supply, let us trace out the consequences of coping with upward pressures on price by imposing a “ceiling.” There are some less visible consequences of price ceiling. Unable to raise price openly, firms may use subtler strategies. They may eliminate discounts or seasonal sales, reduce quality or variety or convenience of their offerings, or concentrate production in product lines that happen to have received a better break from the price-control authorities. Supplies may be sold abroad, leaving even less available for domestic consumers. And of course black markets may arise, providing a wider scope for people specializing in illegal activity. In extreme cases, there may be a breakdown of legitimate trade. In this connection, we can learn much from a previous great inflationary episode associate with World War 11 and its aftermath.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Managing Cash and Liquidity


In a turbulent environment, cash returns are important, if not more important, than reported profit returns. Cash returns lead to liquidity, and liquidity is a top priority consideration whenever risks and uncertainties surround a business situation, as they do in so many cases today. Cash and liquidity put any company in a better position to withstand a surprise blow, adapt to sudden changes, and capitalize on the narrower windows of opportunity that are commonplace in a turbulent environment.

This doesn’t mean that profits and profit growth are not important. The whole purpose of any business enterprise is to maximize profits and profit growth, but this objective will  not be achieved if business unit managers do not focus more time and attention on managing their cash and liquidity. Any entrepreneur that has lived through a start-up knows the importance of cash and liquidity. The entrepreneur knows from experience that a business can go bankrupt even while it is reporting profits. But it will never go bankrupt as long as its cash and liquidity positions are strong. Most corporate executives understand this point also, but many do not follow through to make sure it is sufficiently stressed or understood at the operating level. This is where the problem lies. Most business unit managers who operate under a corporate umbrella tend to overlook the importance of managing their own cash and liquidity and look instead to the corporation as a never ending source of funds.

The results are apparent in most corporations. Capital expenditure proposals tend to be a “wish list” often justified on project volume gains or cost savings that never occur. Working capital is allowed to build without adequate regard for carrying costs on the cash commitment. In short, overinvestment in plant and equipment, and working capital often serves as a buffer to cover sloppy business practices and control. These are practices that inevitably lead to an investment base that is too big for the business and to marginal profit returns.

Many operating managers in a corporation are not even aware of the costs incurred while excess capital is tied up in the business. This is not an exaggeration. Just ask any four or five business unit managers how much it costs to carry their inventory. Most of them will acknowledge an interest cost of, say 7—8 percent, but few will recognize that total carrying costs, which include storage, taxes, obsolescence, and shrink, actually run closer to 30 percent in today’s environment. We would also bet that none of them have such charges against their earnings, even though it is a very legitimate cost of doing business.

Not every company operates this way. Most corporate executives are not tough minded or rigorous enough in challenging cash commitments, and most business unit managers have more cash tied up in their business than required.

Ideally, every manager should think like a small business entrepreneur with his or her own money at risk. If this were the case, we would not see so many companies with bloated balance sheets and marginal returns. Left on their own, most business unit managers do not think this way, however. Life is not easier when you can draw almost at will on coroprate resources to meet the payroll, build inventories, and buy supplies, tooling and a lot of equipment. Under such conditions you don’t have to worry very much about how to make ends meet.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Manage for Consistency


Most companies would prefer to grow steadily at a healthy rate rather than doubling in size one year and losing money the next. No one can manage this kind of schizophrenia effectively with any long-term success, and no one should try. Next to profitability, the most important goal a company should strive for is consistency.

If flexibility is the means, then consistency—of performance and growth—is the end. This sounds like something of a contradiction. If one is being flexible how can one be consistent? In fact, not only are they compatible, but a flexible, responsive management virtually guarantees consistency. It is inflexibility that causes erratic behavior. A company goes on for too long adhering to all the old rules and outdated modes of performance. Then one morning someone wakes up, panics, overreacts, and throws out all the rules. That can make people nuts.

To manage consistently you have to behave consistently. Even if people don’t like what you are saying, they still want to know where you are coming from.

Inconsistency in management breeds all sorts of unnecessary anxieties in the people being managed. There are enough legitimate anxieties in business without adding to them by not letting people know where you are coming from.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Corporate Butchery


The gap between vision and reality is particularly evident in the arena of corporate transformation. Many corporate transformation programs are carried out with the subtlety of the crazed butcher wielding a chain-saw. The blind pursuit of flattening the gierarchy or overhead reduction can have unexpected consequences as follows:

  • The section that is cut out might hold valuable knowledge or be a vital component of a key cross-functioned process. Many companies settle down to the task of amputation without first identifying the key processes that deliver the value sought by customers. These are the nerves and arteries without which the organization is dead meat.
  • Areas and activities that lose money may still generate contribution.  Cutting them out, without reducing activity elsewhere that does not add value for customers, could result in a heavier burden upon other units. Further activities may appear unprofitable in the light of the relocated costs.

Much of the damage results from the application of approaches that were accepted with some reluctance practised and regarded as legitimate in the bureaucratic organization. In the network organization, however, they can be dangerous, and may also be in direct conflict with its articulated values.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please contact Asif J. Mir