Wednesday, August 5, 2020

The Matrixculation: UP-MBA Enrollment Process

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The Matrixculation A Study of the UP-MBA Enrollment Process


By Johanne C. Sebastian


Executive SummarY


Write my Essay on The Matrixculation: UP-MBA Enrollment Process for me


Introduction


NEO, a 0-something computer programmer who is currently dissatisfied with his boring, unchallenging, and grossly underpaid job situation, applies for an MBA degree at the U.P. College of Business Administration He passes the exams with flying colors; Neo is now qualified to enroll in one of the most prestigious MBA programs in the country.


After the first tri-sem enrollment which goes without a hitch,he decided to study the enrollment process in detail for the next tri-semester. He was going to try to identify and document any areas for improvement, to be submitted to the powers-that-be for consideration and possible implementation.


Problem Identification


!What can be done to FURTHER IMPROVE the enrollment process (with regards to time, convenience and possible future expansion?)


!What is the ideal situation that will maximize student satisfaction without breaking the budget of the college?


Analytical Framework


!We shall attempt to analyze the existing enrollment process-its strengths, advantages, weaknesses, and other pertinent facts- with regards to the time and effort required for every step.


!We shall be taking the perspective of an enrolling student (Neo) that shall use data gathered from first-hand empirical exposure to the whole process.


!Tools such as Flow Diagrams, SWOT analysis, Comparative Analysis Tables, etc. shall be used to visualize and organize the data to be gathered.


!Aside from the empirical data, we shall be attempting to gather data from other schools offering the same program, and perform a comparative analysis to determine any areas for improvement.


Observations/Recommendations


1 Re-evaluate the conveniences of the enrollment process, the need for a "one-stop-shop".


Consider AUTOMATION of the Registration Process.


Implementing Steps


!Re-evaluate the structure of classes whether larger classes for electives can be held.


!Plan and come up with a preliminary project costing for a computerized enrollment system.


!Evaluate the possibility of payment handling at the college level for night programs of MBA and MS Finance.


!Consider 4-hour Registration "KIOSKS" to be located outside the college available for students without regular Internet/Computer access.


BA 4 SECTION H Case # 1


Contents


Executive Summary


Table of Contents


Prologue/Introduction


Case Analysis


i)Problem Definition/Case Issues


ii)Analytical Framework


iii)Background


iv)Analysis


v)Strengths , Weaknesses , Opportunities, and Threats Analysis


vi)Recommendations


vii)Implementation Plan


Conclusion/Epilogue


Appendices


prologue


The following paper is an Analysis of the UP MBA Application process. To make it a little more interesting, I will borrow certain characters and make several allusions to the popular cyber thriller "The Matrix" by the Wachowski Brothers.


INTRODUCTION/SynopsiS


Our story begins with NEO, a 0-something computer programmer who is currently dissatisfied with his boring, unchallenging, and grossly underpaid job situation at METACORTEX Enterprises Inc., a multinational software firm based in the Philippines. Having read something in WIRED magazine about the potential salary/career boost that an MBA degree promises, he facilitates his review for the annual MBA entrance exams at the U.P. College of Business Administration by enrolling in the various pre-program workshops offered by the college.


The exam was a lot different from what he had expected. He was worried because he had prepared for a GMAT-like exam because the Oracle had told him to do so. Much to his consternation on the scheduled exam day, he noticed that the structure was a far cry from the GMAT reviewers he had uploaded to his brain. After several sleepless nights and stressful days, he finally summons the courage to call up The ORACLE (a.k.a. ANABELLE), to find out if he passed the program or not.


Fortunately-despite some inadequacies in the workshop proper and the misguidance of the Oracle- he passes the exams with flying colors. Neo is now qualified to enroll in one of the most prestigious MBA programs in the country, and he excitedly goes about the business of enrolling for the first trimester.


POST-ENROLLMENT


During the first trimester enrollment session, Neo successfully completes the process with no significant delays or feelings of disgruntlement from long queues and the like. This is despite the fact that it is a FULLY MANUAL, OLD-FASHIONED SYSTEM with no option to register or pay electronically.


The present system is sufficient for the current level of program operations, because the program restricts its population to a specific number of enrollees per term to prevent such problems, as well as to preserve the integrity of the program. Furthermore, the program is highly specialized and relatively independent of other colleges, so it can very well stand on its own without regards to critical linkages and the like.


However, Neo's pragmatic logical side- long trained in the logic and precision of computer languages and code- cannot help but wonder if the whole process can be streamlined to make it more convenient for the students to enroll. (He actually thought that the feeling of "everything's allright" in the enrollment process probably stemmed from the euphoria of passing the entrance exams, and would wane considerably as the student progressed through his studies).


Also, he thought of the FUTURE, and what would happen if the College decided to expand its operations (i.e., take on more MBA students, move to a bigger building,etc).


In any case, he decided to study the enrollment process in detail for the next tri-semester. He was going to try to identify and document any areas for improvement, to be submitted to the powers-that-be for consideration and possible implementation.


Problem Definition


Even if there is actually no REAL OVERWHELMING problem at the present level of operations, the existing situation is far from ideal. Being such, the following issues will have to be tackled


!What can be done to FURTHER IMPROVE the enrollment process (with regards to time, convenience and possible future expansion?)


!What is the ideal situation that will maximize student satisfaction without breaking the budget of the college?


Analytical FrameworK


To help Neo address these issues, the group shall do the following


!We shall attempt to analyze the existing enrollment process-its strengths, advantages, weaknesses, and other pertinent facts- with regards to the time and effort required for every step.


!We shall be taking the perspective of an enrolling student (Neo) that shall use data gathered from first-hand empirical exposure to the whole process. Particular attention shall be given to the following


Detailed Enumeration of Activities


Estimated time required for each activity (low-high estimate)


Person/Office involved in the activity


Location of the aforementioned person/office


Flow of activities


Tools such as Flow Diagrams, SWOT analysis, Comparative Analysis Tables, etc. shall be used to visualize and organize the data to be gathered.


!Aside from the empirical data, we shall be attempting to gather data from other schools offering the same program, and perform a comparative analysis to determine any areas for improvement.


!Other Notes and Observations shall be infused to the analysis.


!After a thorough analysis of the existing situation, we shall recommend what activities or processes are believed to be "removable", and propose implementing steps to instigate any changes if necessary. At this point, no cost will not be considered as a factor, so this will be called the "Utopian" Solution.


!After proposing the "Utopian" Solution, other factors such as cost/ time required for implementation/etc. shall be considered, so as to come up with an "Ideal" solution that will maximize student convenience and satisfaction while keeping the costs to the college at a reasonable level.


(Of course, the "utopian" solution for a person such as NEO would be to FULLY COMPUTERIZE the entire system, so that you never have to go to school for documents or paperwork until the very first day of classes. Due to advancements in technology and the continuing affordability of powerful computer systems, this is actually quite feasible and "doable" in a short span of time. )


UP MBA PROGRAM BACKGROUND


The MBA Program of the University of the Philippines aims to help managers gain a distinct advantage in their profession, whether they are in industrial, financial, government or non-profit institutions. The MBA Program seeks candidates of high caliber -- i.e., students with strong academic backgrounds, professional experience, personal maturity and the interest and discipline to develop their managerial and leadership potential. On the average, 50 students are admitted into the Full-time Program, and twice as many in the Managers Program.


To achieve this goal, the College offers a broad-based program curriculum which hopes to strike a balance between technical training and practical problem-solving, that is founded on current management theories and approaches. It is complemented by case analyses, company/industry studies, business games and other experiential learning methods. A conscious effort has been made to develop a curriculum responsive to the unique features of the Philippine and Asian environments. MBA students engage in an intensive study in current management concepts and techniques through a core curriculum covering the functional areas in business as well as economics, applied mathematics and statistics and behavioral science. Students are encouraged to gain added functional expertise by pursuing elective courses offered at the College of Business Administration or in allied graduate units of the University.


ACADEMIC INFORMATION


The two programs of study are Full-Time Program and Part-Time or Managers' Program.


The Full-Time program can be completed in five trimesters (1 / years) and the Managers' program in eight trimesters ( / years). The degree requirements are the same for both, each with a minimum of 4 academic credit units.


° FIRST TRIMESTER - June to Mid-September


° SECOND TRIMESTER - mid-September to December


° THIRD TRIMESTER - January to April


AnalySis of Existing System


At present, the UP MBA Enrollment system is a FULLY MANUAL PROCESS, with no facilities as of yet to register/pay electronically.


Process Flow Diagram


The UP MBA Enlistment is a series of activities that the MBA student undergoes to officially enroll in a particular trimester.


The process starts with the MBA student obtaining permission from the MBA Coordinator to enroll in the current semester. Once given the permission, the student selects a subject schedule from the choices (if any). He will then proceed to fill up the documents given to him (Form-5, etc.).


The accomplished documents are then forwarded to the librarian, for library deficiency checking. After which, the student will proceed to the assessors to have the corresponding fees indicated in the document.


After assessment, the student proceeds to the registrar to pay enrolment fees. The student will present the official receipt to the MBA Coordinator in order to receive his/her class cards.


Below is a Process Flow Diagram of the current procedure of the UPMBA enlistment


The Proposed System


The authors of this study would like to propose to have the enlistment done on-line. The students can then enlist without having to go to the college.


The new system will begin with the students receiving a notice of eligibility to enroll, either from the BA Information Systems Group or from the MBA Coordinator. The students can then log-in to a system where they can choose their schedule, check their deficiencies and have their papers assessed.


Payment in the new system can be done electronically (bank transfers, ATM, Credit cards) or personally through the MBA Coordinator.


The idea of a "One-Stop-Shop" is the basis of this new system.


Below is the Process Flow Diagram of the proposed system.


PROCESS / TIME / FLOW ANALYSIS EXISTING SYSTEM


PROCESS / TIME / FLOW ANALYSIS


PROPOSED SYSTEM


Comparative AnalysiS


OVERVIEW OF THE ENLISTMENT PROCESS OF OTHER B-SCHOOLS


For our purposes of study we limited the analysis to two other B-schools, De La Salle and the Ateneo Graduate School.


The enlistment procedure for the De La Salle resembles that of the UP system. The student first has to obtain an approval to enroll form the program director, before he or she can proceed in the enrolment process. La Salle's difference form UP is in the completion of forms. UP students manually encode almost every form (Form-5, Class Cards, etc.) while La Salle students enjoy some convenience as some of their forms are automatically printed. Payments for both schools are remitted to their respective registrars/ accounting office.


The Ateneo Graduate School of Business recently launched their on-line enlistment program, allowing the students to do their enlistment on-line. Payment however, is still done personally at the school's registrar.


Below are the details of the enlistment of the De La Salle and Ateneo School of Business as derived from their respective websites


De La Salle University


The graduate students accepted to the program must observe the following enrolment procedures


1.Obtain the approval of the Graduate Studies Director to enroll. Any student with two Incomplete (Inc.) grades will not be allowed to enroll.


.Obtain the consent of the Graduate Studies Director to enroll in the subjects listed on the Course Approval Form (CAF). Foreign students must present their clearance from the Liaison Officer for Foreign Students (Registrars Office).


.Proceed to the Registrars Office Graduate Studies Section for the encoding of subjects and the printing of the Enrolment Assessment Form (EAF). Grantees of the Student Financial Assistance Program (STUFAP) should proceed to the STUFAP Office for approval/renewal of scholarship grant. Faculty development grantees should accomplish the Application for Study Grant Form (obtainable from the Office of the Vice President for Academics). This must be submitted together with the EAF to the Accounting Office.


4.Pay the assessed tuition and other fees at the Accounting Office.


Note A student is enrolled only after payment has been made or grant approval has been submitted to the Accounting Office.


Ateneo Graduate School of Business


1. The online registration will be available ON-CAMPUS in the Makati, Sta. Rosa, Subic, and Cebu campuses from September 15 to 0 by means of computers found in these campuses. Our technical staff and the registrar's staff will be available to assist you. . Students who wish to register OFF-CAMPUS online from their offices or homes can access our website and click on the appropriate buttons to access the site. Our website is www.gsb.ateneo.edu.


. To access, please use your student identification number as user name and your family name as your password.


4. Then proceed and follow the instructions for registration.


5. For payment of tuition fees, please proceed to your respective campuses Cashier for the Makati students, the site assistants for Subic, Sta. Rosa, and Cebu campuses. All payments must reach the Cashier and the site assistants and validated no later than 700 PM of the same day. Failure to pay on or before this time will cancel your enrollment.


6. Paying online is not yet available because we are still in the process of finalizing the arrangements with various banks including PAYPLUS. We hope to have this facility ready in the next enrollment period.


7. If you cannot yet enroll ONLINE, please proceed to our respective campuses for your enrollment and our staff will be glad to assist you.


S.w.o.t. analysis


UP-Diliman College of Business Administration - Integral unit of UP Diliman


!Offers BS BA, BS BAA, MBA, MS in Finance and Ph.D. in BA


!Only MBA and MS Finance follow the trimestral schedule


!Has about 70 students in MBA


!UP is composed of the two-year Day Program and the three-year Night Program


!Both consist of the same 1 basic breadth courses and then 8 elective courses.


!Courses are structured ladder-type based on pre-required subjects, with seasonal electives courses.


!One class of 5 students each in two year levels, and Two classes of 5 students each in three year levels.


MBA APPLICATION THE EXISTING SYSTEM


!Every January, about 1,000 college graduates with minimum required work experience take the entrance exam


!Top-ranked examinees take interviews


!Selected applicants undergo summer workshop in three basic fields


!By May, students who pass the three fields are accepted and begin enrollment.


STRENGTHS


!Easy to Adjust


!Existing system allows instant notifications, pre-advising and process adjustments, with actual presence of MBA Program Secretary or staff


!No breakdowns


!Fully manual enlistment and matriculation does not crash.


!Central University Cashier


!All responsibility of payments and receipts are assigned to University Accounting Office


WEAKNESSES


!One-Night Schedule


!Each of the three year levels are assigned only one night to avail of night-time enlistment and matriculation.


!Requires Actual Presence for Priority


!Students are required to be present on those nights to avail of enlistment priority.


!Need to Travel to Cashier


!Students need to travel to the university cashier is many blocks away, requiring a jeepney ride.


OPPORTUNITIES


!No Computer Investment


!No need for program orserver for enlistment and assessment


!No Cashier Problems


!Payment management handled by Univ. Acctg Office


!Special to MBA Schedule


!Only MBA and MS Finance follow trimester system in UP.


!No required subjects in other UP units.


THREATS


!Inconvenient to Many Students


!Some students find inconvenience in


!Competing for enlistment priority for limited slots in course offerings


!Except for enlistment day, payments only up to 4PM


!Inefficient Image


!Low-tech image considering tuition fees as high as competitors such as ADMU, DLSU, and UA&P


AUTOMATED SYSTEM ADVANTAGES


!Less Waiting Time


!Less Transportation Time/Effort


!Eliminates Bottleneck of Queuing


!Less Stress


!No Redundancy in filling up forms


!Convenience of Electronic Payments


AUTOMATED SYSTEM POSSIBLE PROBLEMS and POSSIBLE SOLUTIONS


!Security (System can break down/be hacked)


Password System


Use Secure Sites/Firewalls etc.


!Not everybody has access to an Internet enabled Computer all of the time


Consider the use of 4-hour KIOSKS to be located within the college premises (like an ATM machine)


!Not everybody has a credit card


Accept bank-to-bank transfers / ATM payments / cash payments. Electronic payment is just an OPTION.


!Possible large setup cost


Consider "phasing" of the hardware


Include upgradeability / open source in software proposal.


!Linking the Independent System to the Main UP System


Use a BRIDGE program to link ONLY the information the main system needs (e.g. list of graduates, etc)


!Linking the Accounting /Payments Systems


Same as above, but use a more secure protocol.


!Unforeseen Events (Change MAT, Dropping, etc)


Provisions for such events must be carefully studied and built into the software


observations /recommendations


Main Recommendation(s)


STEP 1 Re-evaluate the conveniences of the enrollment process, the need for a "one-stop-shop".


!The student should only stay in ONE BUILDING; ideally ON THE SAME FLOOR and IN ADJACENT ROOMS for the whole registration process, and not be subjected to unnecessary motion/travel


!Due to the fact that most MBA students are also working, consider the EXTENSION OF HOURS during the registration process.


!Consider "discounts" for early payment and heavier fines for delayed payments.


!Flow/Steps should be clearly posted and visible; if possible, registration guidelines should be distributed electronically ahead of time.


!EPN's (Enlistment Priority Numbers) should include the earliest/latest possible time to be serviced, so that the student will not have to wait for service.


STEP Consider AUTOMATION of the Registration Process.


CONCEPTUAL SYSTEM SPECIFICATIONS


!Electronic Mail Notification System (Entrance Exam Passed or Failed)


!Automatic Generation of Schedules / Drop Down menus for Registration


!Automatic / ON-Line Registration


!One-time input of repetitive data; everything should be filed in a database for easy data retrieval


!Automatic Generation of forms (form 5,classcards)


!Automatic Checking/Assessment (javascript)


!"Bridge Program" for possible linkage to the UP System's main servers


Implementing steps


!Verify the College's plans of Expansion


!Re-evaluate the structure of classes whether larger classes for electives can be held.


!Plan and come up with a preliminary project costing for a computerized enrollment system.


!Evaluate the possibility of payment handling at the college level for night programs of MBA and MS Finance.


!Consider 4-hour Registration "KIOSKS" to be located outside the college available for students without regular Internet/Computer access.


Conclusion/ EPILOGUE


Now that Neo has performed the appropriate studies, he believes that the College can benefit from his ideas/recommendations. Not necessarily to be implemented all at once, but at least little by little. He believes that future generations of MBA students will reap the benefits of his ideas due to the maximization of their time and convenience.


- E n d -


appendices


MBA PROGRAM


COURSES AND ELECTIVES


The UP MBA Program curriculum, founded on the latest management concepts, balances technical training with practical problem solving.


The Programs courses are delivered by a seasoned full-time faculty, in tandem with lecturers who are prominent practitioners in industry. The learning process is enhanced by a specialized library with the Philippines largest collection of business management books and journals, well-appointed facilities, and up-to-date learning equipment.


The study program consists of a total of 1 core and elective courses. The core courses are in economics, Quantitative methods, managerial accounting, finance, marketing, production/ operations, human behavior in organizations, and business policy. Elective courses may be taken at CBA or in other colleges of the University. These concentration courses may be in areas like investment theory and practice, advanced topics in finance, international finance, management of technology, new enterprise planning and management, special topics in policy formulation and implementation, management information systems, controllership, advertising, personnel and industrial relations, and managing with emerging technologies.


•BA 01 (ECONOMIC ANALYSIS)


Macroeconomic theory and policy, with reference to the Philippine business environment.


BA 0 (MANAGERIAL ECONOMICS)


The application of microeconomic analysis in business decisions, including the analysis of the behavior of firms under various market structures and types of government intervention.


Prerequisite BA 15 or consent of instructor


•BA 1 (ADVANCED MANAGEMENT SCIENCE IN BUSINESS OPERATIONS)


The application of advanced operations research/management science techniques and models to specific business problems.


Prerequisites BA 11 and BA 1, or BA 15, Consent of Instructor


•BA 14 (PHILIPPINE BUSINESS ENVIRONMENT)


Sociological, technological, legal, psychological, economic and other factors which influence business decision-making in the Philippines.


•BA 15 (BASIC QUANTITATIVE METHODS FOR BUSINESS DECISIONS)


Mathematical and statistical techniques for sound business decisions, particularly in the functional areas of management. Balances the technical and managerial aspects of model-building, and focuses on the applicability of quantitative approaches to usual business problems.


Prerequisites Knowledge of basic calculus and elementary statistics, familiarity with college algebra and introductory calculus, computer proficiency.


•BA 0 (MANAGERIAL ACCOUNTING AND CONTROL I)


Financial accounting policy within the framework of accounting conventions, principles, measurements and procedures for internal control and for the preparation of public reports and management's use of financial accounting data.


•BA 1 (MANAGERIAL ACCOUNTING AND CONTROL II)


Managerial cost accounting, responsibility accounting, management control systems and basic concepts of formal long-range planning systems.


Prerequisites BA 0, computer proficiency


•BA 4 (INVESTMENT MANAGEMENT)


Deals with case problems on investment analysis and management for individuals and institutions.


Prerequisite BA or BA 80.


•BA 6 (CONTROLLERSHIP)


Work of controller in a business firm in connection with the construction, control, and interpretation of accounts for internal use.


Prerequisite BA 1


•BA 8 (NEW ENTERPRISE PLANNING AND MANAGEMENT)


Problems involved in planning and founding new enterprises. Examination of business opportunities.


•BA 7 (SEMINAR IN FINANCIAL MANAGEMENT)


Special topics that may vary with every offering.


Prerequisite BA or BA 80.


•BA 8 (MANAGEMENT OF FINANCIAL INSTITUTIONS)


Deals with problems and policies in the effective management of financial institutions including bank lending and institutional investments. The course also covers a study of the character and structure of the money and capital markets, and of the functions of investment banking firms as financial intermediaries.


Prerequisite BA or BA 80.


•BA (FUNDAMENTALS OF MARKETING MANAGEMENT)


The basic nature of the marketing philosophy (the marketing concept), market opportunities and threats, marketing strengths and weaknesses and the major marketing program. Inclusion of a strategy (versus a tool) orientation shall develop a deeper understanding of the processes involved in marketing strategy formulation and implementation.


Prerequisite BA 01


•BA (ADVERTISING)


Study and application of principles and theories of advertising. Covers problems in profitable use of advertising, in stimulating primary and selective demand, and in building promotional programs and agency relations.


Prerequisites BA 1, BA and BA 1 or BA 15


•BA 4 (MARKETING RESEARCH AND ANALYSIS)


Principles and methods of marketing research and appraisal of the results.


Prerequisite BA 0 or BA


•BA 6 (FOREIGN MARKETING)


Study of the export-import trade with emphasis on analyzing the commercial feasibility of export products.


Prerequisite BA 0 or BA


•BA 7 (SEMINAR IN MARKETING MANAGEMENT)


Special topics that may vary with every offering.


Prerequisite BA 1 or BA


•BA 8 (NEW ENTERPRISE PLANNING AND MANAGEMENT)


Problems involved in planning and founding new enterprises. Examination of business opportunities.


Prerequisites BA or BA 80., BA 1 or BA , and BA 41 or BA 4


•BA 4 (FUNDAMENTALS OF PRODUCTION AND OPERATIONS MANAGEMENT)


The scope and responsibility of the production and operations management function planning, organizing and assembling of resources as well as the directing and controlling of production operations or activities in manufacturing or service organizations. Prerequisite BA 15 or BA 1


•BA 4 (MANAGING INNOVATION)


Technological innovation as a source of competitive advantage and innovations in other aspects of business, e.g., marketing, financial and organizational innovations.


Prerequisite BA 4 and consent of instructor


•BA 45 (MANUFACTURING POLICY)


Comprehensive case studies on broad policy problems of selected industries. This course intends to integrate the various courses in industrial management.


Prerequisite Graduating students only.


•BA 46 (SEMINAR IN PRODUCTION AND OPERATIONS MANAGEMENT)


Special topics that may vary with every offering.


Prerequisite BA 41 or BA 4


•BA 51 (FUNDAMENTALS OF ORGANIZATIONAL BEHAVIOR)


Facets of management practice concerning individuals and groups in organizations. Focusing on the human aspects of management, this course aims to enable students to understand individual and group behavior including leader behavior, and other aspects of the organization system such as organization design, human resource policies and practices, organizational change, organization culture and organization development, and how these affect organizational behavior.


Prerequisite None


•BA 5 (PERSONNEL ADMINISTRATION AND INDUSTRIAL RELATIONS)


Personnel policies and the functions of the personnel and industrial relations manager are studied through readings depicting actual situations dealing with personnel problems.


•BA 56 (SEMINAR IN PERSONNEL AND INDUSTRIAL RELATIONS)


Selected problems in personnel administration and labor relations.


•BA 60 (MONEY AND BANKING)


Theories, problems, and policies concerning money, credit, and the banking system. Emphasis given to Philippine conditions.


Prerequisite BA 01


•BA 6 (INTERNATIONAL FINANCE)


Management of foreign exchange risk. The methods of financing foreign trade and investment, financing procedures for export-import transactions, gold movements, capital movements and the role of international finance institutions.


Prerequisite BA 60 or BA or BA 80.


•BA 70 (AGRIBUSINESS MANAGEMENT)


Management problems of firms in national and international and other agricultural industries.


Prerequisite BA 1 or BA


•BA 80.1 (FUNDAMENTALS OF FINANCIAL MANAGEMENT)


Provides an understanding of the essential concepts and principles on firm valuation and the key decision areas of investment, financing and dividend policy. Involves application of financial analysis tools learned from BA 0 to short-term and long-term concerns of financial management. The central themes will be on firm and shareholder value, the risk-return tradeoffs of the firm's financial policies, and how these policies are influenced by the business and competitive environment in which the firm operates. The basic knowledge and skills for relating to the financial objectives of the firm and the general framework that the finance manager uses in pursuing these objectives shall be acquired.


Prerequisite BA 0


•BA 80. (CORPORATE FINANCE AND FINANCIAL MARKETS)


Deepens understanding of the financial management framework, and broadens the knowledge and skills base to the level required for pursuing more advanced or specialized topics in finance. Strengthens skills in financial forecasting and planning, investment evaluation and portfolio theory, financial structure choices and design, valuation of basic types of securities, and the functions and structures of financial markets, aside from the general features and uses of financial derivatives.


Prerequisite BA 80.1


•BA 86 (MANAGING INFORMATION TECHNOLOGY)


The uses and potentials of information technology in managing organizations. The potentials of IT in support of individual and organizational information processing at functional or strategic levels, and the analysis of the impact of new systems on existing ones will be covered.


Prerequisite Consent of Instructor


•BA 0 (GENERAL MANAGEMENT)


A pragmatic approach to problem-solving in organizational management. The analysis of organization problems and development of analytical skills involved demonstrate the importance of viewing functional tasks from a generalist's standpoint.


Prerequisite Consent of instructor


•BA 1.1 (STRATEGIC MANAGEMENT I)


Integration of the various tool and functional area courses into a unified whole aimed at developing a general management point of view. The important analytical and conceptual approaches that are used to make business and corporate strategy decisions as the process through which these decisions are made and implemented, to develop cross-functional and holistic thinking skills.


Prerequisite All tool and functional area courses. Passing of the comprehensive examination


•BA 1. (STRATEGIC MANAGEMENT II)


The role of general managers in sustaining and enhancing corporate performance. The determination and appraisal of an organization's resources and plans as basis for strategic action.


•BA (SPECIAL TOPICS IN ADMINISTRATIVE POLICY)


Special topics that may vary with every offering.


Prerequisite Consent of Instructor


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IntroductionWith the airline industry in the USA hardlymaking financial records, how has it beenpossible for a small company such as South-west Airlines to completely satisfy their cus-tomers since 171? (Bovier, 1). Whatlessons has the management of SouthwestAirlines learned in such a relatively short timeperiod? How have these lessons enabled thecompany to capture such a portion of themarket? (Bovier, 1; George and Jones,16)Southwest Airlines began its service in171. Since then the killer-whale paintedplanes have become familiar to their cus-tomers and to corporate America. Besidesbeing profitable, expanding constantly anddefending its high place on the Fortune 500list, Southwest has a very special trait attitude(Bovier, 1). The Southwest perspectivestems from CEO Herb Kelleher and South-west's employee motivation.The purpose of this article is to discoverthe sources of success of Southwest Airlines asa company with high employee motivation.Three factors will be addressed (1) Southwest as an "excellent" company;() the source of employee motivation in this"excellent" company; and () whether lessons learned can adequatelyaddress potential future problems forSouthwest.Southwest the "excellent" companyIn Peters and Waterman's In Search ofExcellence (18), the authors summarize theresults of their study of "excellent" compa-nies. Forty-three US companies, taken fromthe Fortune 500 list "had to be of above-aver-age growth and financial return over a 0-yearperiod, plus have a reputation in their busi-ness sector for continuous innovation inresponse to changing markets" (Pugh andHickson, 17, p. ). The authors thenapplied the McKinsey 7-s framework to theselected companies. The 7-s frameworkdescribes the seven variables "that any intelli-gent approach to organizing had to encom-pass" (Peters and Waterman, 18, pp. -10)structure, strategy, systems, style skills, sharedvalues, and staff. Peters and Watermanexpanded this list of excellence to includeeight attributes 16Managing Service QualityVolume 8 · Number · 18 · pp. 16-16 MCB University Press · ISSN 060-45The authorsUlla K. Bunz and Jeanne D. Maes are based at theUniversity of South Alabama, Mobile, AL, USA.AbstractIn an era in which adapting to change means survival, it isimportant to study what successful organizations havedone. While the airline industry in the USA has not madethriving financial headlines, one small company has beenable to satisfy its customers completely and achieve aplace among the Fortune 500 in a relatively short period oftime. In three steps, this article examines what SouthwestAirlines has done to reach this level of achievement andmaintain its excellent employee and customer relations.First, the company is defined as "excellent" according tothe criteria established by Peters and Waterman. Second,management-employee relations, organizational trainingand strong leadership are identified as the sources ofemployee motivation. Third, loss of strong leadership andorganizational structure are discussed as possible futureproblems influencing motivation and service. The articlecloses by pointing to Southwest Airline's concept of serviceas the true source of motivation and excellence.Case studiesLearning excellenceSouthwest Airlines'approachUlla K. Bunz and Jeanne D. Maes


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(1) a bias for action; () close to the customer; () autonomy and entrepreneurship; (4) productivity through people; (5) hands-on, value-driven; (6) stick to the knitting; (7) simple form, lean staff; and(8) simultaneous loose-tight properties.Since in 18 Southwest Airlines had onlybeen operating for 11 years, it was not includ-ed in Peters and Waterman's study. Yet, ifcarefully examined, Southwest can be labeleda successful learning organization in the lightof Peters and Waterman's 18 criteria.A bias for actionA company showing a bias for action favorsexperimentation. Management encourages"can do" and "let's try" problem solutions(Pugh and Hickson, 17, p. 100). Open-door policies and short deadlines are alsotypical. In general, companies with a bias foraction are open for change and new innova-tions.At Southwest, open-door policies and"let's try" approaches are part of the specialSouthwest perspective. Kelleher has beenclassified as the sort of manager who will "stayout with a mechanic in some bar until fouro'clock in the morning to find out what isgoing on. Then he will fix whatever is wrong"(Labich, 14, p. 46). Employees are encour-aged to generate ideas and then try them."Southwest workers often go out of their wayto amuse, surprise, or somehow entertainpassengers" (Labich, 14, p. 50). For exam-ple, employees may explain the usual safetyregulations through rap-singing (compareChakravarty, 11, p. 50 and McNerney,16, p. 5). Employees often generate andimplement solutions to problems on the spotinstead of waiting for time-consuming topmanagement decisions.Close to the customerCloseness to the customer implies communi-cating and treating them as valued clients, notas a valued wallet. Southwest maintains veryclose ties to the customer. Suggestions aretaken seriously. Even letters to the companyare answered personally, not according to astandardized formula. Kelleher believes thattaking customers' letters seriously helpsSouthwest in two ways. First, the letters helpKelleher as CEO to monitor employee perfor-mance. Second, input from the customersreveals areas in which Southwest can improve(Bovier, 1).Typically, the company receives approxi-mately 1,000 letters weekly. Each customerwho writes gets a personal response not aform letter within four weeks. Explainingwhy a plane was late can require rattling on forseven pages. While this is time-consuming,requiring more than 1,500 labor hours perweek from 45 employees in two departments,Kelleher believes that the letters are the bestsystem he has found to monitor airline perfor-mance (Teitelbaum, 1, p. 115).Southwest's personal interest in the cus-tomer even goes so far as to reschedule com-muter flights if the flight schedules interferewith the schedules of frequent fliers.Autonomy and entrepreneurshipCompanies encouraging autonomy and entre-preneurship are characterized by innovatorsand risk takers on all levels. Internal competi-tion is encouraged, not suppressed, and man-agement fosters leaders on all levels (comparePugh and Hickson, 17, p. 101)."Southwest is a company that encouragesits people to express their individuality. . .Southwest's culture also de-emphasizes hier-archy" (McNerney, 16, p. 5). At South-west, every employee can express opinionsfreely and make suggestions. For example,Southwest encourages leadership. As Jaffeexplains "We want everyone to be a leader inhis job; you're a leader not just in what yousay, but in the way you listen and respond toothers, in what you do, and most importantly,how you do it" (Jaffe, 11, p. 5). Internalcompetition at Southwest exists in a friendlyand motivating way. "Departments showerone another with free ice cream, pizza, orother goodies as tokens of customer devotion or simple in appreciation of a job well done"(Teitelbaum, 1, p. 116).Southwest also accepts failure as a naturaland forgivable occurrence. "A specialattribute of the success-oriented, positive, andinnovating environment is a substantial toler-ance for failure" (Peters and Waterman, 18,p. ). Anne Bruce, manager of SouthwestAirlines' University for People employeelearning and development division, explainsSouthwest's rules for successful corporations.Among these rules (Bruce, 17, p. 11) arewalk a mile in someone else's shoes; take164Learning excellence Southwest Airlines' approachUlla K. Bunz and Jeanne D. MaesManaging Service QualityVolume 8 · Number · 18 · 1616


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accountability and ownership, and celebrateyour mistakes as well as your triumphs.Productivity through people"Excellent" companies are people oriented,and productivity through people underlinesthis notion. Companies recognize "ordinarymembers of the organization as the basicsource of quality and productivity gains. . .andthey treat workers as people" (Pugh andHickson, 17, p. 101).Southwest employees share similar person-ality characteristics, such as a sense of humorand an outgoing attitude. In contrast to othermajor companies, "Southwest...doesn't usepersonality tests" (Sunoo, 15, p. 68). Nev-ertheless, the company hires on the basis ofattitude. "If you don't have a good attitude,we don't want you, no matter how skilled youare. We can change skill level through train-ing. We can't change attitude"(Chakravarty,11, p. 51).This policy exists for a reason. Kelleherbelieves that it is easier to treat customers withrespect when treating one another the sameway (compare Teitelbaum, 1, p. 115). "Ifyou don't treat your own people well, theywon't treat other people well"(Teitelbaum,1, p. 116). Vice president Colleen Barrettstates "We will never jump on employees forleaning too far toward the customer, but wecome down on them hard for not usingcommon sense" (Teitelbaum, 1, p. 115).In treating its employees well, Southwestexpects the same behavior towards the cus-tomer. As proof of its success, Southwest hasearned a reputation as one of the friendliestairlines (Bovier, 1).Hands-on, value drivenThe hands-on approach describes companiesin which management becomes activelyinvolved. In addition to directing work, repre-sentatives of upper management participate inlower level work because of a belief of equalityand to "publicly demonstrate their commit-ment to high standards" (Pugh and Hickson,17, p. 10) through their own work.Southwest's upper management performone day each quarter as reservation agents,ticket agents, baggage handlers, etc., in orderto "maintain a feel for what's going on in thefield and understand the difficulty of thesejobs" (Bovier, 1, p. 58). Even pilots some-times help check in customers or clean air-planes to shorten turn-around times.Stick to the knitting"Stick to the knitting" is a metaphor thatimplies keeping focused on well-performedtasks and keeping off over-hastened expan-sion. Many companies expand too fast andthen cannot deal with upcoming problemssuch as insufficient funds or lack of special-ized expertise.Southwest's CEO Kelleher is cautiousabout expansion. Even though he has addedmany national flights, Southwest is not plan-ning to compete with international airlines."We don't intend to fly transcon" (Velocci,15, p. 41). Since most companies try toincrease profit through expansion, keeping acompany small and focused can be a newconcept. Or, as Kelleher says, "You can inno-vate by not doing anything, if it's a consciousdecision" (Jaffe, 11, p. 58).Simple form, lean staffKeeping an organizational staff lean simplifieschannels of communication in an organiza-tion. The more layers of hierarchy that exist,the longer it takes to make a decision, and theless familiar management is with daily occur-rences. Since its establishment, Southwest hasbeen leanly staffed (Chakravarty, 11). Forexample, in order to save time and money,flight attendants clean the planes themselvesinstead of ordering in a cleaning crew.Southwest constantly hires and rarely laysoff new people (McNerney, 16), so theterm "lean staff " has to be defined in a rela-tive sense. While other airlines hire in proper-ous times and fire in more difficult times, thenumber of Southwest Airlines' employeescontinues to grow but only to meet theirneeds. In this way, the company preserves itssimple form with limited staff, even whengrowing from 18 to over 11,000 peoplebetween 171 and 1 (Bovier, 1, p. 58).Simultaneous loose-tight propertiesSimultaneous loose-tight properties can beachieved through a company "both central-ized and de-centralized. . .They are fanaticalcentralists around the few core values they seeas key to the enterprise quality, reliability,action, regular informal communication, andquick feedback" (Pugh and Hickson, 17, p.10). Southwest can be described by all thesecharacteristics.The organization as a whole is democratic.Individual input is encouraged and hierarchyin general is de-emphasized (McNerney,165Learning excellence Southwest Airlines' approachUlla K. Bunz and Jeanne D. MaesManaging Service QualityVolume 8 · Number · 18 · 1616


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16). At the same time, Kelleher remains theunchallenged leader of Southwest. Kelleherpersonally approves every expenditure over$1,000 (Labich, 14) and considers havingfinancial aspects under control as very impor-tant. "No matter how good things may look,you should not let your spending get out ofcontrol" (Chakravarty, 11, p. 48). Despitehis tight reign on financial aspects, "UncleHerb" or "Herbie," as he is called by mostemployees (Kelly, 18, p. 55), is highlyrespected and liked among Southwestemployees."Excellent" companies are motivatingAs the preceding discussion shows, Southwestfulfills all eight attributes of an "excellent"company as defined by Peters and Waterman.Most "excellent" companies also have astrong leader. In Southwest's case, this isHerb Kelleher. Therefore, Southwest Airlinescan be classified as an "excellent" company.Being employed by Southwest alone ismotivating. "Southwest Airlines. . .puts a highpriority on selecting motivated people tobegin with" (McNerney, 16, p. 4). Yet,there are other factors especially motivating atSouthwest. Three of these factors will bediscussed here management-employee rela-tions, training at the University for People,and Kelleher as a strong leader.Management-employee relationsFirst, Southwest's organizational culture ischaracterized by good employee-managementrelations. "The old-fashioned bond of loyaltybetween employees and company may havevanished elsewhere in corporate America, butit is stronger than ever at Southwest" (Labich,14, p. 46). Southwest employees on alllevels think of the company as a family(Labich, 14). They feel personallyinvolved, responsible, and motivated. DavidRidley, director of marketing and sales atSouthwest, commented that he had come toappreciate "a place where kindness andhuman spirit are nurtured" (Labich, 14, p.50). Alan Boyd, retired chairman of AirbusNorth America, observed, "At other places,managers say that people are their mostimportant resource, but nobody acts on it. AtSouthwest, they have never lost sight of thefact" (Labich, 14, p. 50). Almost 0 yearsago Herzberg already concluded that "theonly way to motivate the employee is to givehim challenging work in which he can assumeresponsibility" (Herzberg, 168, p. 5).Training at the University for PeopleA second means that Southwest uses to moti-vate employees is the company's University ofthe People. "The airline's corporate universitytrains 5,000 people per year" (Bruce, 17,p. 11). Every new employee undergoes astandardized training session. In addition,every year supervisors, managers and execu-tives have to undergo a two-day training at thecompany's headquarters in Dallas. Thistraining curriculum includes the FrontlineLeadership program for all employees insupervisory positions. The Leading withIntegrity Program trains first-time managers;the Customer-Care Training Programinstructs flight attendants, pilots and others asto the company's most current performancestandards (Sunoo, 15).Southwest uses training as an importantmotivation tool. Employees are re-familiar-ized with the company's culture, missionstatement, and corporate identity. Regulartraining prevents mistakes on the job, andnew contacts are made. Because employeesperceive that they are respected, valued, andinformed at all times, they tend to be moreinvolved in the company and are more highlymotivated. This, in turn, usually leads tohigher performance.Additionally, regular training for allemployees tends to decrease hierarchicalthinking. Consequently, when space shuttlepilot Gibson transferred to Southwest Air-lines, he took "Southwest's six-week pilotcourse and may [have ended] up doing thescut work that low-cost-airline pilots occa-sionally must, such as loading bags and clean-ing out cabins" (Graham, 16, p. 8)Strong leader KelleherA third motivator at Southwest is CEO Kelle-her himself. He is respected by his employeesand knows several thousand of them by name.In addition, Kelleher's direct involvement hasresulted in many of the company's successes."None of the airline's achievements would bepossible without its unusually good labor-management relations, a direct result ofKelleher's hands-on efforts" (Labich, 14, p.47).Humor comes naturally to Kelleher, andhe is responsible for bringing it into the work-place at Southwest (Chakravarty, 11).166Learning excellence Southwest Airlines' approachUlla K. Bunz and Jeanne D. MaesManaging Service QualityVolume 8 · Number · 18 · 1616


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167Learning excellence Southwest Airlines' approachUlla K. Bunz and Jeanne D. MaesManaging Service QualityVolume 8 · Number · 18 · 1616Occasionally, he dresses up in costumes andserves peanuts with the flight-attendants. Heencourages fun because he believes that itstimulates productivity. Kelleher denies that his existence is a vitalpart of Southwest Airlines. Others disagree."Nobody inside the company, or outside forthat matter, could likely fill the many roles heplays for his employees inspirational leader,kindly uncle, cheerleader, clown." (Labich,14, p. 5).In conclusion, while "no single theoryadequately explains all human motivation"(McNerney, 16, p. 1), the factors used bySouthwest Airlines discussed above certainlyheighten the chances of having motivatedemployees. Instead of demanding that they dosomething for the company, Southwest Air-lines seems to be concerned with what thecompany can do for them and for its cus-tomers. With Southwest, it is almost as if themission statement reads, "Ask not what youremployees can do for you, but what you cando for your employees".Possible future problems at SouthwestSouthwest is praised for its good manage-ment. Despite excellent management, thecompany still is vulnerable to organizationalproblems. Two possible sources of motiva-tional problems could be the loss of strongleadership and organizational structure.Loss of the strong leaderWhile Kelleher was one of Southwest Airlines'founders, it was not until 178 that he wasnamed chairman. In 181 he took over theCEO's job (Kelly, 18). Kelleher can becharacterized as a charismatic leader (Weber,147). Half a century ago Weber identifiedpotential problems of companies evolvingaround charismatic leaders. One of the fore-most problems involves the leader's successor(Pugh and Hickson, 17).There will be a point at which Kelleher hasto resign due to declining health. Companyobservers do not believe that a second Kelle-her can be found (Labich, 14). Nonethe-less, Kelleher himself is convinced that thecompany will thrive without him. Clearly, heis not concerned so much with a replacement,but with a footstep followerI've been through this myself. When Lamar[Muse, Southwest's chief executive from 171to 178] left, a lot of people said SouthwestAirlines is over, its kaput, because Lamar Museis Southwest Airlines. Well, Lamar left in 178and Southwest is still here in 11 [and 17],and doing very well. Right now we have three orfour people at a level where they could be chiefexecutive of Southwest very successfully, andwe've got others below them (Chakravarty,11, p. 51).However, Kelleher might oversee an impor-tant aspect. Even though some other man-agers might be able to run the company effec-tively, Kelleher as a person will be impossibleto replace. Southwest's employee motivation,to a large degree, derives from his personalityand motivating behavior (Labich, 14, p.47). Having fun at Southwest might not be soexciting when it becomes a motivation strate-gy instead of radiating naturally from the mostimportant man in the company. While South-west Airlines as an organization might at firstcontinue to thrive, employee motivation maydecrease after Kelleher's departure.In the long term, Southwest mightencounter similar performance-reducingmotivation problems as most other aircraftcarriers. "Leaders play a key role in maintain-ing and transmitting the culture. . .The key toleadership is managing cultural change"(Pugh and Hickson, 17, p. 151). Afterleaving the company, the leader Kelleher willno longer be able to transmit culture andmanage cultural change. He will have becomethe cultural change.Organizational structureDuring the discussion of Peters' and Water-man's eight "excellent" attributes, SouthwestAirlines was described as a de-centralizedcompany with simultaneous loose-tight prop-erties and a strong leader. Southwest also is anexample of Handy's federal organization,resulting from the shamrock organizationshown in Figure 1. There are certain prob-lems that could result from this structure.Handy characterizes the ways in whichpeople are linked to modern organizations byusing the Irish national emblem, the sham-rock. "The shamrock organization has threeparts, comparable to the three leaves theclover-like shamrock has on each stem" (Pughand Hickson, 17, p. 6). These three partsinclude the professional core with a few, welltrained employees situated in the democraticAthena task culture; the contractual fringethat describes how parts of the work are doneby contractors, with employees being paid for


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the output, not for the input; and the flexiblelabor force that is situated in a structured roleculture with a strong leader.The federal organization that results fromthe shamrock organization is more thandecentralized. It has a small center and isguided by two key principles. The first issubsidiarity, the principle that the larger andhigher body should not exercise functions thatcan be carried out efficiently by smaller andless bodies" (Pugh and Hickson, 17, pp.7-8). Self-responsibility and leadership onall levels are key characteristics of Southwest'sculture.The second principle refers to organiza-tional members' desire to increase the scopeof activities of their roles in the subsidiarities.Handy uses the analogy of the inverteddoughnut to focus on the changing nature oforganizational roles (Pugh and Hickson,17). Southwest employees and managerstake over new roles and tasks wheneverneeded.The primary motivational problem likelyresulting from this organizational structure isinternal competition. Other possible organi-zational problems include chaos, lengthydecision making, and loss of a sense of reality.Internal competition may appear at first tobe very motivating. Handy notes that itrequires managers' trust to let the subordi-nates act independently. At Southwest,departments and employees monitor eachother's performance and even reward qualityperformance (Teitelbaum, 1). As anorganization becomes larger, it becomes moredifficult to achieve both excellent perfor-mance and innovation. Kelleher is aware ofthis problem and tries to counteract, "Thebigger we get, the smaller I want our employ-ees to think and act" (Teitelbaum, 1, p.115). Nevertheless, an organization with over11,000 employees (Bovier, 1) is no longera small organization. Friendly competitioncan easily turn into rivalry. At that point, thecompany will suffer, because performanceincreases only a certain point from increasedconflict (George and Jones, 16).Conclusion application of lessonslearned?The preceding pages have discussed South-west Airlines. First, the company was ana-lyzed according to the eight attributes of"excellent" companies, as defined by Petersand Waterman (18). Southwest representsall eight attributes and, therefore, can becalled an "excellent" company.Second, this acticle discussed manage-ment-employee relations, corporate trainingand charismatic leadership as motivationsources at Southwest. Third, two possiblefuture problems influencing employee moti-vation were anticipated for Southwest. Loss ofthe strong leader and the organizational struc-ture could both lead to motivation and perfor-mance decline, especially when occurringconcurrently with other, externally originat-ing problems.Throughout this article, the discussion hasfocused on attitude at Southwest and howattitude has made a difference in creatingmotivation and attaining excellence. The168Learning excellence Southwest Airlines' approachUlla K. Bunz and Jeanne D. MaesManaging Service QualityVolume 8 · Number · 18 · 1616Professional Core• qualified professionals, technicians, managers• they own the organizational knowledge; hard to replace• task culture• number of employees goes down(small core), but productivityand pay increaseFlexible Labor Force• part-time and temporary workers (fast growing)• role culture• employees' treatment influences their outputContractual Fringe• takes on increasingly larger proportion of work• example advertising, research, computing, catering are done outside the organization by agencies• pay for output, not for inputFederal Organization• results from shamrock organization• more than decentralized organization• small center, no direct control over other parts; ex. university• two key principles1.Subsidiarity-don't do it yourself if a subordinate could do it-requires trust.Inverted Doughnut-subordinates must increase range of activities-little guidance is provided• traditional organization Apollo role culture with large core and small area of discretion• federal organization Athena task culture with small core and large area of discretionleads toSource Pugh and Hickson, 17Graphics Ulla K. BunzFigure 1 The shamrock organization describes the way people are linked tomodern organizations. Information from Pugh and Hickson (17). Graphicalarrangement by Ulla K. Bunz


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literature is not unanimous about the origin ofthis attitude, or about what characteristicspecifically makes Southwest special. Kelleherthinks Southwest's being special stems fromthe employees' approach toward the companyand the resulting organizational metaphor,"The people who work here don't think ofSouthwest as a business. They think of it as acrusade" (Teitelbaum, 1, p. 116). Otherscredit the corporate culture (Sunoo, 15),Kelleher's personality and motivation toleadership (Jaffe, 11), corporate trainingand vision (Bruce, 17), or "Strong compa-ny culture, job stability, opportunities forgrowth, incentives, compensation" (McNer-ney, 16, p. 5).Perhaps the most important lesson that theorganization has learned pertains to creatingand maintaining a more relaxed workingenvironment in which workers enjoy perform-ing their jobs. While the concept of service hasbecome very sterile in the USA, Southwestemployees take their performance seriouslyand are dedicated to service. They allowthemselves and others to make mistakes, to becreative, humorous, empathetic and involved.Southwest employees bring service back towhere it originated, from the human level. Ifthey can remember this important lesson,Southwest Airlines should be able to success-fully confront future problems.ReferencesBovier, C. (1), "Teamwork, the heart of an airline",Training, June, pp. 5-5, 58.Bruce, A. (17), "Southwest back to the FUNdamen-tals", HR Focus, March, Vol. 74 No. , p. 11.Chakravarty, S.N. (11), "Hit 'em hardest with themostest", Forbes, September 16, Vol. 148 No. 6, pp.48-51.George, J.M. and Jones, G.R. (16), Understanding andManaging Organizational Behavior, Addison-WesleyPublishing Co.Graham, D. (16), "From space shots to milk runs",Business Week, December 0, No. 508, p. 8.Herzberg, F. (168), "One more time how do you motivateemployees?", Harvard Business Review, Vol. 46, pp.5-6.Jaffe, C.A. (11), "Moving fast by standing still", Nation'sBusiness, October, Vol. 7 No. 10, pp. 57-.Kelly, K. (18), "Southwest Airlines flying high with'Uncle Herb'", Business Week, July , No. 11, pp.5-5.Labich, K. (14), "Is Herb Kelleher America's best CEO?",Fortune, May , Vol. 1 No. , pp. 44-50.McNerney, D.J. (16), "Employee motivation creating amotivated workforce", HR Focus, Vol. 7 No. 8, pp. 1, 4-6.Peters, T.J. and Waterman, R.H. (18), In Search ofExcellence Lessons from America's Best RunCompanies, Harper & Row, New York, NY.Pugh, D.S. and Hickson, D.J. (17), Writers on Organiza-tions, Sage Publications, Thousand Oaks, CA. Sunoo, B.P. (15), "How fun flies at Southwest Airlines",Personnel Journal, June, Vol. 74 No. 6, pp. 6-71.Teitelbaum, R.S. (1), "Where service flies right South-west Airlines," Fortune, August 4, Vol. 16 No. 4,pp. 115-16.Velocci, A. (15), "More city pairs await Southwest",Aviation Week & Space Technology, August 7, Vol.14 No. 6, pp. 40-.Weber, M. (147), The Theory of Social and EconomicOrganization, Free Press.Further readingBanks, H. (14), "A '60s industry in a '0s economy",Forbes, May , pp. 107-1.Beddingfield, K.T. and Loftus, M. (17), "Europeunbound. Bold little airlines have cut the cost oftouring the continent", US News & World Report,March 1, Vol. 1 No. 1, p. 68-70.Bryant, A. (14), "Kiwi seeks new labor ethic, end to Usvs. Them", New York Times, Thursday, February 4, pp.D-1, D5.Bryant, A. (15), "One big happy family no more",The New York Times, March , Vol. 1 No. 5.Handy, C. (178), The Gods of Management, SouvenirPress, Pan Books.McKenna, J.T. (14), "Southwest, pilots trade stock forsalary cap",Aviation Week and Space Technology,November 8, Vol. 141 No. , p. .N.N. (11), "`The best (and worst) airlines", ConsumerReports, July, Vol. 56 No. 7, pp. 46-.N.N. (14), "Lighten up and treat passengers to somefun", Aviation Week and Space Technology, March14, Vol. 140 No. 11, p. 10.N.N. (17), "Freedom in the air", The Economist, April 5,Vol. 4 No. 8011, pp. 6-.Rothman, A., DeGeorge, G. and Schine, E. (1), "Theseason of upstart start-ups", Business Week, August1, No. 81, pp. 68-.Taylor, J.H. (188), "Risk taker", Forbes, November 14, Vol.14 No. 11, p. 108.Zellner, W., Baker, S., Hof, R.D. and Greising, D. (15),"Go-go goliaths", Business Week, February 1, No.411, pp. 64-70.16Learning excellence Southwest Airlines' approachUlla K. Bunz and Jeanne D. MaesManaging Service QualityVolume 8 · Number · 18 · 1616


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DOW CORNING CORPORATION AND SILICONE BREAST IMPLANTS

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On May 15, 15, after years of controversy surrounding silicone breast implants, Dow Coming Corporation (DDC)¡Xa joint venture of Dow Chemical and its parent company, Corning Incorporated¡Xfiled for Chapter 11 bankruptcy protection. Richard Hazelton, the CEO of DCC, explained the decision ¡§It became clear to Dow Corning that to continue our current course ultimately would make it impossible to either resolve this controversy responsibly or remain a healthy company. A Chapter 11 reorganization will bring closure and preserve underlying business.¡¨


BACKGROUND MARKET OPPORTUNITIES, COMPETITIVE PRESSURES, INTERNAL COMPANY QUESTIONS


Dow Corning Corporation was a start-up venture between Dow Chemical and Coming in 14. As an incubator, the goal of DCC was to create and market a new material¡Xsilicone. While the company later proved successful, with almost 10,000 employees and revenues in excess of $ billion, it did so with the support of Dow Chemical and Coming, both looking for promising profits from the new venture.


The first silicone gel implant took place in 164. Since that time, ¡§about two million women nationwide have received breast implants, most of them for cosmetic reasons.¡¨ Although the majority of these women were satisfied with the implants, ¡§a small minority of recipients in both Canada and the United States have complained that the implants have ruptured, allowing gel to leak into the breast cavity and migrate to other parts of the body. Some women maintain that implant problems cause pain in the chest arms, and back, as well as debilitating autoimmune diseases such as rheumatoid arthritis. Some also complain that scar tissue formed around the implants, causing a hardening of the breasts.¡¨


While the silicone gel breast implants were believed by scientists at DCC to have been safe for humans, internal memos suggest that competitive pressures and a lack of attention to some animal tests and personnel complaints short-circuited safety issues for business reasons. Competitors had by 175 already cut DCC's market share in this area by a third. To counter the competition, DCC wanted to rush its new product, fib-gel, to market by June 15. Projected annual sales were 50,000. An internal memo, dated January 1, 175, stated, ¡§17 weeks, 11 days, ,04 hours, 174,40 minutes.¡¨


Gel-bleed (the seepage of silicon modules through the plastic container that housed the new liquid gel) was so evident that the implants had a noticeable greasy, even oily, sensation when handled. In an internal memo dated May , 175, sales managers stated that the implants on display at a trade show ¡§were bleeding on the velvet in the showcase.¡¨ Even members of mammary task force that had been established by DCC in January 175 expressed concern over problems that gel-bleed might cause in humans.


Animal studies conducted on rabbits in February 175 showed that inflammation occurred. A test on dogs also showed that gel had leaked internally Thomas Talcott, a product engineer with the implant team, argued for more study because of his concern that a ruptured implant sac in a human could cause health risks. When his arguments were ignored, he resigned. The fib-gel went to market in the fall of 175. A disgruntled and angry sales force started fielding complaints from plastic surgeons over gel-bleed, leaking gel, and ruptured implants. An internal memo from a sales professional stated to his superior, ¡§To put a questionable lot of mammaries on the market is inexcusable. I don't know who is responsible for this decision but it has to rank right up there with the Pinto gas tank.¡¨


One of the first lawsuits filed was by a woman who ¡§claimed that a silicone breast implant manufactured by DCC caused her to contract a disabling immune-system disorder. The case, brought in 18 by Mariann Hopkins, was among the first breast-implant lawsuits. In 11, a federal jury in San Francisco had ordered Dow Corning to pay Hopkins $840,000 in compensatory damages and $6.5 million in punitive damages. The award at the time was the largest ever in a breast-implant case.¡¨ Dow Corning claimed that this award ¡§triggered the explosion of breast-implant litigation¡K. State and federal Courts have been inundated with cases . . . against all manufacturers of mammary prostheses in which plaintiffs claim whatever injury disease or illness from which they suffer is causally related to their implants.¡¨


In response to the litigation, DCC, Bristol-Myers Squibb Co., and Baxter Health Care Corp. attempted to handle the individual suits together in a class action suit. These companies agreed to pay $4.5 billion to women who contended that implants caused illness. The settlement was designed to provide women with net payments ranging from $105,000 to $1.4 million, depending on theft physical condition and age. These amounts could be reduced if an unexpected number of women registered to participate and if companies refused to pay more. Women would have an opportunity to leave the settlement if payments were reduced, although such actions could possibly have jeopardized the entire settlement idea. C ¡§The settlement contributions would be based on each manufacturer's market share, litigation exposure, and ability to defend the claims, with Dow Corning paying $ billion, Bristol-Meyers $1.5 billion, and Baxter $556 million.¡¨ The manufacturers also had the ability ¡§to drop out if a certain number of victims chose not to participate. Each manufacturer would be left to their own discretion to determine if the number of participants was significant.¡¨ The manufacturers were trying to push this class action settlement knowing that ¡§if the cases are all tried together. . . every recipient in a successful suit would probably get a small settlement, much less than the multimillion dollar awards that a handful have gotten.,¡¨


Many people feel DCC threatened bankruptcy early on to scare women into opting to join the class action suit. The various methods used by manufacturers to get women to join the suit were not completely successful, however, as ¡§more than 11,00 women rejected the $4.5 billion settlement. Those women have reserved their right to sue implant manufacturers individually.¡¨ These individual lawsuits, coupled with the difficulties DCC experienced in coming to agreement with so many other women, led to DCC's filing for Chapter 11. ¡§The bankruptcy filing signaled the breakdown in an attempt by Dow Corning and three other corporate defendants to funnel claims through a no-fault facility somewhat similar to the still-unresolved problem of asbestos cases in the 180's.¡¨


ENTER THE ATTORNEYS


As DCC and the other manufacturers learned, when a crisis arises due to product liability, it is not easily resolved. ¡§The difficulties were legion. Among the women involved, there was a wide range of consequences and varying degrees of certainty about the link between implants and subsequent medical difficulties. The intensity of the pursuit varied from lawyer to lawyer, and the willingness of parties to settle changed with time, making patterns of settlement difficult to establish.¡¨ Two Houston attorneys in particular campaigned through public ads to solicit women who had experienced problems with gel implants. These attorneys kept their clients away from the class action suit in order to have each person appear before the manufacturer, a judge, and a jury. The lawyers won $5 million in their first trial against Bristol-Myers Squibb. These attorneys at one point had over ,000 individual cases lined up for adjudication. They were obtaining settlements of $1 million per case with fees of 40 percent per settlement. It can be argued that this factor¡Xthat is, the continuing success of the attorneys at persuading juries of the fate of injured women who were not properly informed of the gel's dangers and potential risks¡Xput Dow Corning's president and executives in the position of having to declare bankruptcy.


DCC provides a compelling modern-day example of the close relationship that developed between product liability suits and Chapter 11 filings, an issue that Congress must finally address. ¡§If bankruptcy is now the ultimate limit on liability what figure short of that can Congress agree on to avoid the danger implicit in Dow Corning's case that an otherwise viable business, and the jobs that go with it, might go down the drain of tort practice.¡¨


THE FINANCIAL PICTURE


In order to fully understand the financial implications that silicone has had for DCC, it is essential to note the sales and reported earnings of DCC and its parent companies, Corning Inc. and Dow Chemical.


In 167, just after the first silicone implant surgery DCC reported sales of $10 million. By 170, sales had climbed to $140. million on earnings of $1.8 million. By 180, DCC's reported sales soared to $681.5 million, while earnings rose to $7. million. An estimated 150,000 million individuals annually sought implants for augmentation or reconstruction. In Boston, the surgical fees for an implant could run from $,000 to $5,000, according to Dr. Sharon Webb, a plastic surgeon at the Faulkner Breast Center. Anesthesia and hospitalization could add another $,000 to the tab.


The sales growth of DCC significantly enhanced its two parent companies, Corning Inc. and Dow Chemical. In 170, Corning Inc. reported sales of $5 million on earnings of $.5 million. This figure rose to $1,5.7 million in 180 on earnings of $114.7 million. A similar impact was seen on overall sales for Dow Chemical, with reported sales of $1,11 million in 170 on earnings of $10 million. These figures rose to $10,66 million in sales on earnings of $805 million in 180.


The 180s saw continued growth in the breast implant market. This growth led DCC's reported sales of $01.1 million on earnings of $5. million in 185. ¡§By the middle of the decade, surgeons were performing more than 10,000 breast implant operations every year. The average patient was a college educated woman in her early thirties, who was married and had two children.¡¨ By 10, DCC had reached sales of $1,718. million on earnings $1711 million. Corning Inc.'s sales were $,40.5 million on earnings of $ million; and Dow Chemical reported sales of $1,77 million on earnings of $178 million.


Unfortunately for DCC, as discussed earlier, the company soon found itself at the center of one of the largest product liability suits in American history. The suits caused DCC's litigation expenses to rise sharply. Reported litigation expense was $5 million in 11. This figure rose to $6 million in 1, and, by 1, DCC reported spending over $640 million in litigation. In 1, DCC reported sales of $,04.7, while actually losing $87 million dollars. DCC had 14 sales of $. billion but reported a $6.8 million loss, which it attributed to the expense of the breast implant claims.


DCC's financial outlook appeared grim. Merrill Lynch estimated that DCC would earn $8.0 per share in 15 (down from the earlier estimate of $.00 per share) and $.15 per share in 16 (down from the earlier estimate of $.50 per share). Merrill Lynch also reduced the five-year earnings per share growth rate for DCC to 0%.


A HISTORICAL PERSPECTIVE


In 176, the federal government passed an amendment to the federal Food, Drug, and Cosmetic Act which provided stricter reporting and inspection standards for all new medical devices. At this time, there were 1,700 types of devices on the market, many of them containing silicone. Through a grandfather clause, these devices were allowed to remain on the market with minimal Food and Drug Administration (FDA) review. A manufacturer simply filed a ¡§510(k)¡¨ form informing the FDA of the new product and its similarity to an existing product already on the market. In 16, the FDA acknowledged that there were 58,000 medical devices, many containing solid silicone, that entered the market through this 510(k) process.


It was almost 1 years before further government attention was given to the breast implant controversy. ¡§A Public Citizen, physician Dr Sydney Wolfe, said in a petition,' . . . an increasingly larger pool of women is being created who may in the prime of their lives, ultimately develop chronic illness, disfigurement and disability because of the implants (silicone).¡¨ Dr. Wolfe began to publicly attack manufacturers and plastic surgeons for downplaying the potential health risks. Opponents of Dr Wolfe agreed with Bruce Hansel, a biochemist and bioengineer at the Emergency Care Research Institute (ECRI), a watchdog group that had been tracking silicone-containing medical devices. Hansel stated, ¡§¡¥You can nit-pick anything to death. There will never be a perfect biomaterial,' but ¡¥I would say that silicone in my view is probably the biomaterial of the 0th century It is the best biomaterial we have going for us now.¡¨' ¡§Manufacturers continue to deny a link between such illnesses of the human immune system and breast implants, but various doctors have concluded that such causation exists.¡¨


As a result of conflicting expert medical data and opinions, the FDA once again became involved in the breast implant controversy. The agency announced, in November of 188, that although manufacturers could continue to produce breast implants, they would have to provide more detailed information on the safety concern for a 11 investigation. Unfortunately the 11 investigation proved uneventful. Although the FDA panel cited the overall lack of safety data, it did not move to ban the sale of breast implants. The panel noted testimony from cancer patients (and their psychological benefits from the implants) as an integral part of their decision.


Finally, in 1, after DCC was ordered to pay $6.5 million in punitive damages to a breast implant claimant, FDA Commissioner David Kessler announced a 45-day moratorium on the sale of silicone implants. ¡§Since April 1, the FDA has banned breast implants for cosmetic purposes and allows them only for reconstructive breast surgery as part of the controlled clinical studies.¡¨ This was the last significant act by the federal government in the breast implant controversy.


As illustrated, the swirling controversy in the DCC case can be summarized as whether or not the silicone gel breast implants cause medical disorders in women who have had implant surgery. By 11, ¡§the FDA had received ,500 reports of illnesses or injuries associated with the implants, which have been used in one million women. But the degree of risk was unclear because extensive research had not been done.¡¨ As pressures mounted regarding the product's safety, Dow adamantly ¡§denied any link between the implants and illness.¡¨ Moreover, ¡§rather than wait for results from the [FDA] research, Dow undertook to determine the safety of silicone gel implants.¡¨ The Dow study of silicone implants in March 1 ¡§reported that the silicone gel in the implants altered the immune systems of laboratory rats . . . but [rats] are more susceptible to inflammatory reactions than humans.¡¨


THE CONTROVERSY


Women who have had medical problems with their implants allege, with their doctors' support that the following medical disorders were present autoimmune disease, breast cancer, arthritis, abnormal tissue growth, scleroderma, lupus erythematosus, fatigue, and nerve damage. Still, DCC has maintained the safety of the implants, stating ¡§plaintiffs [the women] claim that whatever injury, disease or illness from which they suffer is causally related to their implants.¡¨


Numerous studies, including the Mayo Clinic Study, the University of Southern California Study, and a French International Study, reported similar results. The French Ministry said that an analysis of international research ¡§showed that the risk of contracting autoimmune diseases and cancer after the implantation of silicone breast implants was no greater than in the general public.¡¨ Scientists involved ¡§noted that no study could completely dismiss the possibility that breast implants contributed to medical disorders.¡¨ The degree of safety may never be completely known, but as of 15, ¡§about 5% of the two million American women with silicone implants have demanded compensation for side effects.¡¨


THE RIGHT TO KNOW


¡§Dow Corning has actively covered this issue up,¡¨ said Dr. Wolfe, who is director of the Public Citizen Health Research Group in Washington. ¡§They are reckless and they have a reckless attitude about women.¡¨ Wolfe continued, ¡§DCC was only thinking of themselves when they ¡¥repeatedly assured women and their doctors that the implants were safe' while keeping ¡¥guard over hundreds of internal memos that suggested that some of Dow Corning's own employees have long been dissatisfied with the scientific data on implants.'¡¨


The release of these internal memos suggests that Dow has long known of major problems with the silicone implants it has marketed since 175. The following are highlights from a sample of the memos to and from Dow scientists


Jan. 8, 175 Memo from Arthur H. Rathjen, chairman of the Dow implant task force, as Dow rushed a new implant to market ¡§A question not yet answered is whether or not there is excessive bleed [leakage] of the gel through the envelope. We must address ourselves to this question immediately. . . . The stakes are too high if a wrong decision is made. . .


Sept. 15, 18 Memo from Bill Boley ¡§Only inferential data exists to substantiate the long-term safety of these gels for human implant applications.


April 10, 187 Memo to Rathjen and others suggesting that Dow was considering a study to review 1,50 implant recipients ¡§The cost of this data is expected to be minimal, less than $10 million.¡¨ The study never took place.


In response to these memos, Dow Corning stepped up an ad campaign that it had started in the fall of 11. In newspapers across the country, DCC urged women with questions about implants to call a company hotline. The ads said that instead of ¡§half-truths,¡¨ callers would receive information based on 0 years of valid scientific research. But when some women called, they were told that the implants were ¡§100 percent safe.¡¨ Shortly afterward, the FDA warned Dow Corning that some of the information on its hotline was ¡§false or used in a confusing or misleading context.¡¨


An ethical issue at hand, however, is not only whether the implants do or do not cause harm to patients, but also that DCC failed to inform stakeholders and clients that some of their employees felt there was reason for concern about safety. Failure to accurately and timely inform consumers of questionable product uses violated the right of these women to know. ¡§If you do not have data on the range of risks and problems, you are not free to choose, you are free to be ignorant. Informed consent requires both information and choice. Since the companies have not supplied the information, this is a dubious choice.¡¨


AFTERMATH


In June of 14, DCC began to make announcements that it may have to declare bankruptcy if too many women opted out of the $4.5 billion settlement. These comments ¡§led some financial analysts to suggest that the Chairman (Keith McKennon made the statements) was trying to ¡¥scare' women into joining the settlement, which could potentially save the company millions of dollars in litigation fees.¡¨ DCC and the other manufacturers involved in the case have attempted to make the settlement appear generous on their part, but ¡§it is hardly the simple and generous solution described. In reality, the payout to each woman would depend on the total number of claims filed and could decrease dramatically as the number of plaintiffs climbs. And the rights of women to drop out of the plan and seek their own settlements would actually be sharply curtailed. Thousands of sick women could lose their legal access to any compensation altogether. ¡¥This is not insurance,' Norman D. Anderson, a Johns Hopkins University professor stated, who has treated hundreds of patients with problems related to silicone implants, ¡¥This is pennies-on-the-dollar reimbursement.'¡¨


When DCC felt it had become financially overburdened with the trials, it followed through on the threat and filed Chapter 11. This was ¡§a move that threaten[ed] to unravel a $4.5 billion breast implant settlement and has frozen thousands of individual lawsuits. The company's Chapter 11 filing was akin to protective bankruptcy-filing steps taken by big companies in other important product liability cases, which delayed payments to recipients for years. Under Chapter 11, a company gets a reprieve from bills while it works out a way to pay creditors and survive as a healthy business.¡¨


DCC may have modeled its behavior after its parent company, Dow Chemical Corporation. In an attempt to avoid litigation, Dow Chemical Corporation has maintained that it was not aware of DCC's research activities in silicone. Dow Chemical Corporation was initially dismissed from the case until ¡§a federal judge reinstated Dow Chemical as a defendant in thousands of breast implant lawsuits, raising the possibility of new negotiations in a landmark product liability settlement. . . . The ruling ¡¥means Dow Chemical can no longer sit on the sidelines and pretend it is not a player in this litigation.¡¨'


Judge Arthur Spectors approved in December 1 ¡§Dow Corning's $4.5-billion reorganization plan, including $. billion to settle claims brought by silicone gel breast implant recipients. The remaining $1. billion will be paid to commercial creditors, in part through a $00 million¡X$1 billion bond issue.¡¨ Spectors's ruling enabled Dow Corning to emerge from bankruptcy, even though appeals were expected. The company still had to resolve 170,000 implant recipients' product liability claims. ¡§The proposed settlement plan, which represents an agreement between 4% of the plaintiffs and the company, would protect Dow Corning and third parties such as Dow Chemical from future lawsuits. . . . It would also pay $,000¡X$00,000 to plaintiffs, depending on their medical condition.¡¨


Plaintiffs agreed in the settlement to waive punitive damages. Dow Corning established a cap of $400 million to settle claims by plaintiffs ¡§who choose the plan's litigation provision[,] . .. an option for women who do not agree with the settlement offer. The only appeals that could prevent the plan from going forward are challenges to the settlement amount or to the third-party release provision, says Barbara Houser, Dow Corning's lead bankruptcy attorney.¡¨


FINAL THOUGHTS


DCC's silicone breast implant troubles occurred in a free-market, capitalist society. A free market encourages innovation, but it can also lead to corporate manipulation and to the introduction of dangerous products into the market. Marcia Angell, a physician and executive editor of The New England Journal of Medicine, concluded in her book Science on Trial The Clash of Medical Evidence and the Law in the Breast Implant Case that ¡§[o]nly by relying on scientific evidence can we hope to curb the greed, fear and self-indulgence that too often govern such disputes. This is the lesson of the breast implant story.¡¨ Charles Rosenberg, professor of history and sociology of science at the University of Pennsylvania, argued in a New York Times review of Dr. Angell's book that ¡§it is difficult to share her hope that scientific evidence can or will translate easily or naturally into social policy. She is dismayed, for example, that regulations ¡¥should be influenced by political and social considerations.' Yet this is the way our system works. In most policy matters, scientific evidence is only one among a complex assortment of factors that interact to produce particular decisions.¡¨ A careful reading of the events, stake-holders, and outcomes in the silicone breast implant controversy reveals the social, economic, legal, and political¡Xas well as scientific¡Xfactors involved ¡§the practice of Federal regulation, the relationship between science and courts, the lack of consistently enforced professional standards in law, medicine and journalism.¡¨ A major lesson from this case also involves the role of the plaintiffs. The Houston lawyers' relentless pressure with inconclusive medical facts on Dow Corning, along with their courtroom successes, demonstrates that ¡§facts¡¨ alone are insufficient factors in determining truth. Associated Press. (April 1, 14). 5 firms join implant settlement. Boston Globe, 44.


Associated Press. (July 1, 14). Firms may face thousands of suits. Boston Globe, 1.


Associated Press. (Aug. 5, 14). FDA is petitioned to outlaw saline-filled implants. Boston Globe, 17.


Associated Press. (Sept. , 14). Judge finalizes $4.5B settlement from breast implant maker. Boston Globe, .


Associated Press. (Sept. 16, 14). Women rejecting implant award. Boston Globe, 7.


Associated Press. (Feb. 15, 15). Couple wins $5.M in breast implant case Dow Chemical faulted. Boston Globe, 88.


Associated Press. (March 1, 15). France readmits breast implants. Boston Globe, 4.


Associated Press. (March , 15). Dow freed from suit. Boston Globe, 14.


Associated Press. (April 6, 15). Company reinstated in implant lawsuit. Boston Globe, 7.


Associated Press. (May 11, 15). Jury selection is halted over an implant and Dow Corning denies trying to influence liability. Boston Globe, 14.


The best-laid ethics programs. (March , 1). Business Week, 67-6.


Breast implant makers prepare $4B settlement. (March 7, 14). National Underwriter, 6.


Burton, T. (July 14). Adding insult to injury. Progress ive, 8-0.


Carelli, R. (Jan. 10, 15). Justices uphold breast implant award. Boston Globe, 10.


Chisholin, P. (March , 1). Anatomy of a nightmare Dow Coming fights a public outcry. Maclean's, 4¡X4.


Dow Chemical not liable in implant case. (March 0, 15). Facts on File, Medicine and Health, .


Dow Corning announces medical silicone resins. (May 0, 14). Chemical & Engineering News, .


Dow Corning down for the count A new high flier for Boeing. (May 1, 15). Boston Globe, 48.


Dow Corning mulls over filing for bankruptcy. (June 0, 14). Chemical & Engineering News, 8.


Facts on File. (Dec. 1, 14). .


Facts on File. (Feb. , 15). 88.


Facts on File. (March , 15). 154.


Foreman, J. (Jan. 1, 1). hnplants Is uninformed consent a woman's right? Boston Globe, 1.


Foreman, J. (Jan. 1, 1). Women and silicone A history of risk. Boston Globe, 1.


Foreman, J. (Jan. 5, 1). Safety of solid silicone at issue. Boston Globe, 1.


Foreman, J. (May 15, 1). Lawyers fight over limits of implant trials. Boston Globe, 5.


Foreman, J. (June 17, 14). Breast implant study criticized timing, funding of report at issue. Boston Globe, 4.


Foreman, J. (Nov. 0, 14). Dec. 1 deadline to join implant lawsuit. Boston Globe, 6.


Grimmer, L. (Nov. , 1). Silicone-gel implant records altered, company admits. Boston Globe, .


Haney, D. Q. (Dec. 1, 14). Harvard doctors quit implant study, citing conflict. Boston Globe, 5.


Implant makers near a deal. (Feb. 1, 14). Business Insurance, 1, 51.


Lehr, D. (Sept. 10, 1). 4.75B accord eyed on breast implant plaintiffs, manufacturers agree on compensation fund. Boston Globe, 1.


McCarthy, M. (April , 14). U.S. breast implant agreement. Lancet, 7.


Neuffer, F. (March 0. 1). Maker quits implant market Dow Corning cites drop in sales, sets up fund. Boston Globe, 1.


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Monday, August 3, 2020

Human resouces management

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Introduction


What is the idea of flexibility? - 'A business needs to organise itself in such a way as to be able to adapt to change as quickly as possible in order to maintain its competitive advantage.?


Nowadays, implement of flexibility of employment becomes more and more popular in many career fields due to the changing external and internal environment of company. In order to maximize the profit and minimize the risk, the managing change, it includes employee involvement in effecting change, greater customer orientation, and ensuring the skills of employees to the production of goods and the provision of services acceptable to the global market, so as to increase the ability to change to respond to the market needs and demands.


The primary aim of this essay is to evaluate the role of flexibility of employment in the hospitality industry. It divided into four main parts. The first part is going to define flexibility and human resource management. There are some special terms for flexibility to be introduced. It is then follow by the issues of flexibility and human resource management. In this part, it will be discussed about the skill, culture and policy are used in the company. Models of employee flexibility and their application are the next part. Finally, it will come to the trends in using flexibility.


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Main Body


Part 1 Definitions of Flexibility and Human Resource Management


Definitions of Flexibility


In the modern management, the concept of flexibility is often mentioned as a desirable characteristic of firms and employees. Flexible organizations display an ability to change in response to market changes. It should be clear, however, that a range of possibilities exist between rigid organizations and truly flexible ones. This range is discussed. Further, a firms ability to demonstrate flexibility depends to a large degree on the flexibility exhibited by its employees. Firms exhibiting different degrees of flexibility have different demands on the flexibility of their co-workers, which means that a matching between supply and demand exists. (The flexible firm and flexible labor, volume 1 No. 4 0000 P165-170)


In the discussion of labour flexibility the model of the flexible firm developed at the Institute of Manpower Studies (Atkinson, 184; Atkinson and Gregory, 186; Atkinson and Meager, 186; IMS, 186) has enjoyed widespread acceptance, despite its conceptual simplicity and lack of theoretical underpinnings (Pinch et al., 11, p. 08; Pollert 188).


One approach to employment flexibility sees four broad categories numerical flexibility, functional flexibility, distancing, and pay flexibility (Olmsted and Smith 18, p. 51; Pinfield and Atkinson, 188, p. 18). Firms use these types of employment flexibility in different dimensions depending on their specific competitive circumstances, the business strategy they develop to meet this competitive situation, and the constraints and opportunities they face as they attempt to adjust their employment policies (Pinfield and Atkinson 188, p. 1).


The ability of firms is to adjust and deploy the skills of workers over a broad range of tasks to match the changing tasks because of changes in the nature of demand, production methods or technology (IMS, 186; Olmsted and Smith, 18, p. 51).


These different types of flexibility or management strategies have the effect of restructuring the labour market in firms into core and peripheral workers. Simplified, the core group consists of multiskilled, permanent employees, who are also flexible in working time, in terms of adjusting more closely to production demands. The peripheral group provides numerical flexibility in the form of, for example, less job security, part-time work, working on temporary contracts, or being involved in sub-contracting (Atkinson 184, p. ; Bagguley, 10, p. 77; NEDO, 186).


Definition of Human Resource Management


Human Resource Management has been defined as 'a set of policies designed to maximize organizational integration, employee commitment, flexibility and the quality of work? (Guest, 187). It has also been defined as 'the process of attracting, developing, and maintaining a talented and energetic workforce to support organizational mission, objectives, and strategies?(Schermerhorn, 001). This clearly demonstrates that human resource management is more focusing on employees nowadays than in 14 years ago.


The world is keeping on changing and competitors are surrounding everywhere. In response to this competitive challenge, more industry firms tend to increase the range of tasks for employees to perform, raise their skills, and increase their involvement in the company. These strategies are broadly defines as Human Resource Management. The development of human resource management drew on industrial psychology theories of motivation, behavioral theories of job enlargement and enrichment, and organizational behavior theories of better communication and employee involvement (Applebaun and Batt, 17).


Part Issues of Flexibility and Human Resource Management


In one organization, high users of flexibility are more likely to have a human resource presence on the main decision making body of organization, to have written corporate strategies and written human resource strategies. However, for the lower users who are more likely to carry out manpower planning.


For example the project worker and the temp typically work when there is work to do. It is not unusual for a member of a project team to put in very long hours at the end of a project and to take it easy when it is finished. Members of project groups and of self-managing teams often work with different applications of their skills in different settings and with different coworkers and with shifting tasks (Anell, 16). The officer or the diplomat has to achieve more or less the same type of work in different cultures throughout their careers. However, the demanding on adapting to the new culture of diplomat is much higher than on the officer. Besides this, the life-long learner acquires new skills throughout their working life. The ability to find new, solutions to problems that can distinguishes their improviser. The creative thinker also finds new solutions, but, in addition to that, they have the ability to reflect over what they are doing and to think of alternatives, including working together.


Because of this, the emergence of a more strategic approach to human resource management in the service sector industries has been associated with the need to improve quality and efficiency of service provision continually within increasingly competitive conditions. In so doing, the sector has been proactive in targeting groups of workers for whom atypical employment may be preferable, including pre-career workers and secondary earners. It is currently at the forefront in trying to respond to prospective demographic trends, with attempts to recognize the potential contribution of second- and post-career workers.


With the most effective human resource management policies in corporate strategies and practices, organizations search to change an organization's culture. They are two senses for integration, they are, securing the acceptance and inclusion of a human resource management view in the decision of line manager and integrating human resource management issues into an organization's strategic plan. To reflect the organization's core values, the policies of the functions (e.g. recruitment, training, etc.) should be consistent with the business strategies. In addition, through the set of values (quality, service and innovation, etc.) that also can assume an identification of employee and employer interests. However, there can be tension between a strong organization culture and the need to adapt to change circumstances and to be flexible, particularly in the high competitive and rapidly changing environment in which employers have to operate today. (S.R. de Silva, 18)


Part Models of Employee Flexibility and their application to the Hospitality Industry


Since people are wanting beings, they always want more, and what they want depends on what they already have. Based on the Maslow's hierarchy, he pointed out that there are five level needs of people. They included from lowest level, physiological needs(basic one), safety needs (security), love needs(social), esteem needs(self respect) until self-actualization needs(development) at the highest level. People will satisfy the basic needs first, then going to satisfy the higher level of needs. Based on this reason, the management level can depends on what their employees?need in order to motivate them.


However, according to Cappelli and Rogovsky (14), specialised jobs based on scientific management do not meet the psychological needs of workers. Opportunities to widen skill bases and increase worker participation in decision making will not only help improve employee satisfaction, but also help improve organisational productivity due to decreased absenteeism, improved flexibility, and overall employee ability to contribute to workplace improvement.


Although flexibility keep increasing at the workplace level, still there is some theory that can help to explain the patterns of flexibility, or to predict what is possible to occur in the future. Working on the work of Cooke et al. (18), Blyton and Morris (11) suggest that five broad trends are occurring in the re-organisation of industry that indicates forms of flexibility


1.There is a tendency for vertically integrated organisations to use sub-contractors.


.Internationalisation is occurring through the expansion into international markets to increase market share; and, through the forming of joint ventures, mergers, and acquisitions with corporations outside of the domestic sphere.


.There is an increase in investment in flexible automation machinery.


4.There is a new focus on satisfying customers through quality improvement and adapting products and services to customer demand using total quality management (TQM) and just-in-time (JIT) methods.


5.Unskilled, semi-skilled and professional workers are increasingly required to take on a broader range of tasks, and there appears to be a move toward increasing the proportion of professional workers compared to semi-skilled and unskilled workers.


Three influential frameworks that address flexibility at the organisational level include Piore and Sabels (184) flexible specialisation; Atkinsons (184) flexible firm model; and the lean production model developed in Toyota, Japan. Although these three models are not exhaustive, what is distinctive is that each trend identified by Blyton and Morris (11) is central to one or more of these models.


Flexible specialisation is the ability to reorganise the production processes through reorganising the components of production and this is facilitated by new computerised technology. However, the extent of reorganisation is limited by conceptual and physical constraints forced by specialisation. Conceptual restraints arise from the community or industrys sense of shared product. Physical restraints arise because the associated organisations within an industry are geographically located within the community. The commitment of individuals and firms to specialise in a component of the industry is thought to be possible when all resources are utilised with each reorganisation and where all member organisations and employees have a claim to be included within the community. Therefore, the community of firms must create safety nets to retain staff and resources during temporary displacement arising from reorganisation. Also, competition that promotes innovation is encouraged. Innovative firms are considered to gain favourable places within the industry hierarchy, although placement is guaranteed, fairness of placement is not. Competition between similar industries is also considered to help the innovative process. furthermore, limits to destructive competition are needed. Wages and working conditions are set within the industry to avoid competition based on cost cutting measures that could lead to sweating. That is, employment security and trust are required in order for organisations and industry to remain innovative and take advantage of new technology, and for the community to remain cohesive through periods of reorganisation.


Furthermore, there is one more approach to employment flexibility by Alkinson (184), he divided into three categorise, they are numerical flexibility, functional flexibility and pay flexibility. It depends on breaking internal hierarchical labour market by creating a core workforce. It is said to be made up of highly skilled workers who are able to participate in decision making and are directly employed by organization. Job security and high salaries are provided to workers that reflect their skill levels and their importance to the organization.


In the Marriott Hotel, it introduced a six-month pilot scheme at three of its hotels in north-eastern USA, to help managers to strike a better balance between their home and working lives. The scheme helped to identify several inefficient procedures. For example, front-desk managers shifts were scheduled to overlap by an hour, when only 15 minutes were needed to bring the next manager up to date. All managers at one hotel would meet monthly for a financial review, regardless of whether the substantive discussions concerned them directly. Also, managers highlighted new tools - such as Internet access - which would enable them to do their jobs more efficiently. They also felt that on-site IT support would be useful, instead of having to rely on help from corporate headquarters in Washington. (Marriott Hotels attempts to banish the long-hours culture, volume 10 No. 4 00 P1-15)


Before the pilot, 77 percent of managers felt that their jobs were so demanding that they could not take adequate care of their personal and family responsibilities. By the end of the pilot, that number had fallen to 6 percent. The proportion of managers who felt that the emphasis at Marriott was on hours worked and not on work accomplished fell from 4 percent to 15 percent. Managers also reported feeling lower stress levels. Marriott Hotels is now implementing the scheme in hotels across the western, south-central and mid-Atlantic regions, and plans to broaden this further in the future.(Marriott Hotels attempts to banish the long hours culture, volume 10 No. 4 00 P1-15)


Part4 Trends in Flexibility and Human Resource Management


Nowadays, part-time work is on the increase and is playing an important role in Europe. Across Europe, a significant percentage of employers have increased their use of part-timers with the northern countries of the EU (for example, The Netherlands, France, Switzerland, Germany and the UK) showing greater increases than their southern counterparts such as Spain and Turkey (Meulders et al., 16; De Grip et al., 17). Based on surveys of HR practices in some 14 European countries, Brewster et al. (17, p. 11), suggest that almost one in every seven people in the European Union is working part-time and part-time employment has been the major area of growth during the last decade.


A number of explanations for the proliferation of atypical employees in the labour market has been suggested. Atkinson (184) identifies mass redundancies; economic uncertainty; rapid technological change; ongoing reductions in working time; market stagnation and world depression as being among the most important external factors which have caused organizations to restructure their workforce. Another important contributory factor may be increased competition from lower labour-cost countries such as China, Vietnam and Mexico. As Nollen and Gannon (16, p. 84) put it To succeed in this business environment, companies must be able to change rapidly, and they must continuously reduce costs. One cost that many organizations feel should be curtailed is the labour cost (Van Hilst and Jansen, 14). Organizations need to improve their productivity because producing goods and services in Europe is relatively expensive and a different competitive means may be required (Sparrow, 14, p. ). Brewster et al. (14, p. 170) further note, Since work rarely comes in neat seven and a half hour, more or less permanent, packages, to employ people in that way must have built in surplus costs and deficits.


It is argued elsewhere that workforce diversity, where todays worker differs increasingly from any other workers in any other time, is another factor which has led to the adoption of numerical flexibility strategies (Nollen and Gannon, 16, pp. 84-5). It is argued that different aspirations and demographic trends mean that younger people appreciate the freedom that is associated with numerical flexibility (Handy, 18; Spellman, 1). In a study on part-time working in the UK, Naylor (14) estimated that some 7 per cent of part-time employees work part-time because they do not want a full-time job, and only 1 per cent do so because they cannot find a full-time job. This may be explained to some degree by increasing female participation in the labour force, and the need to balance work and domestic life (Brewster et al., 14; Dineen, 18; Gunnigle et al., 14). In the European context, many of the countries which have high levels of part-time employment also have high female participation rates. Meulders et al. (16, p. 57), note that From 1 to 14, throughout Europe, the proportion of unemployed women taking a part-time post rose from 4 per cent to per cent... In the case of women leaving education, the proportion was more stable, moving from per cent to 40 per cent. A point worth noting is that this may be further contributing to the marginalization of women at work, as quite often these jobs are in the lower paid categories (Fynes et al., 16, p. 7).


The objectives of managements, the ways in which enterprises are managed to achieve these objectives and the human resource management and industrial relations initiatives in this regard, are affected by pressures, many of which are exerted by globalization. Changes in industrial relation practices (rather than in institutions and systems) such as increased collective bargaining at enterprise level, flexibility in relation to forms of employment as well as in relation to working time and job functions have occurred as a result of such factors as heightened competition, rapid changes in products and processes and the increasing importance of skills, quality and productivity. These factors have also had an impact on human resource management policies and practices. In managing change, the key elements include employee involvement in effecting change, greater customer orientation, and ensuring that the skills of employees are appropriate to the production of goods and the provision of services acceptable to the global market. As such, managing people in a way so as to motivate them to be productive is one important objective of human resource management. The implications and consequences of globalization include the following


Countries are more economically interdependent than before, particularly in view of foreign direct investment interlocking economies, as well as increased free trade. The inability of economies to be self-sufficient or self-reliant or self-contained has been accompanied by a breakdown of investment and trade barriers.


1.Governments are increasingly less able to control the flow of capital, information and technology across borders.


.There has been de-regulation of financial and other markets, and the integration of markets for goods, services and capital such as the European Community.


.It has led to the de-nationalization of enterprises and the creation of global companies and global webs.


4.Production of goods and services acceptable to the global market, and the convergence, to a great extent, of customer tastes across borders determined by quality.


5.The need to achieve competitiveness and to remain competitive in respect of attracting investment, goods and services. This means, the necessity for high quality skills at all levels to attract high value-added activities, as distinct from cheap labour low value-added ones, and improvements in productivity.


In effect, these environmental changes have forced employers to examine new ways of organizing labour. Employers are discovering that part-time working can increase working time flexibility and reduce costs. (Anon,14, p. 8).


Conclusion


Nowadays, all the employers want to use their workforces efficiently so that they can respond to the fluctuations in demands for goods and services and compete in global markets. Economies need high productivity workforce that can increase competitiveness and respond rapidly to global change. Flexibility can mean minimum standards of work enforced through the law, and it means employers, in partnership with unions developing a highly motivated, adaptable and committed staff through investing in the skills of the workforce and guaranteeing security. It also mean increasing workers?choices, as well as promoting equal opportunities and promoting family friendly.


Besides this, employers can attract and retain qualified employees by offering flexible benefit plans, these plans allow companies to meet the needs of an increasingly diverse labour pool. Flexible benefit plans also permit employers needs to take more control over benefit costs. By creating and maintaining flexible benefit arrangement, employers can keep their workers in steps with a future system that is likely to provide them with choices of many benefit options.(Meyer, J.) To utilise of more flexible labour to be an organizational strategy, greater attention has to pay within the human resources management context revealing the different needs of employees and employers and then negotiating between them. Finally, so as to the addition to innovative services, flexible work arrangements can be the main point to increasing overall productivity.


Since, the enterprises driven by market pressures need to include in their goals improved quality and productivity, greater flexibility, continuous innovation, and the ability to change to respond rapidly to market needs and demands. Effective human resource management is vital for the attainment of these goals. Improved quality and productivity linked to motivation can be achieved through training, employee involvement and extrinsic and intrinsic rewards. The growing interest in pay systems geared to performance and skills reflects one aspect of the increasing significance of human resource management in realizing management goals and a gradual shift from collectivism to the individualisation of pay. In such pay systems a critical attraction is the possibility of achieving these goals without increasing labour costs but at the same time increasing earnings. Realizing management goals and managing change need employee involvement, commitment and training, employee participation, cooperation and team-work - all important human resource management initiatives and activities. (Trends and emerging values in human resource management, Volume No. 001 P 61-68)


Reference


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