Konstantin Y. Smolentsev
Doctor of Political Sciences, the Academician of IIA, ÑÌÑ
Chairman of the Board of Directors
of IC “SMOLENTSEV and Partners”
One of the most scrupulous desires of heads and shareholders is interested and responsible for result personnel. Recently, during meetings with heads I hear one thing the most: “We need investments! When we have investments – we’ll have it all!” Later on that phrase changed to: “We need people! And we’ll solve all problems!” Now I hear more frequently: “Personnel famine! Motivation is needed!!!”
There is truth in all three sayings. And the problem, in general, is one: it is necessary to create an organization, oriented on result with all its echelons – strategic, operative, on a level of each employee.
Things get more complicated or less understandable in strategic management. In majority of successful organizations there is strategic management. Way of thinking of opponents is only acknowledgement of the rule, or laziness, inability or desire to stand out via pseudo-originality.
Operative level. Level of maintenance of current profit. And simultaneously a level or realization of strategic problems. And in that duo-unity there are certain contradictions. Given conflict of interests we can track in overwhelming majority of organizations. There are a lot of reasons, they differentiate and are pretty objective… at first sight.
Persona, employee level. Defining and less manageable. Paradox, seen everywhere! Why? There are much more reasons, than on operative level. Ill say it differently – almost all existing objective and made up reasons are concentrated on this level.
To simplify thoughts lets accept as given following condition: there are thoughtful and stated in information sources views of shareholders and top management on future of their organizations. Let us give it general name – Development Plan. Otherwise we’re talking about thoughtful constructing of motivation, honoring not only past achievement, but, mainly, aiming at achieving set results, further development is simply senseless, and at times harmful. Harmful because it maybe be directed not where its supposed to be, cause opposite unpredictable result, and in conclusion not being able to fulfill promises, that is fraught with disappointments, de-motivation and as a result – loss of controllability.
And then alternativeness begins. First executive person can be a shareholder, or not. Size of a share holding in second case is defining for positioning of that person. Middle level of hierarchy is a level where traditionally all good wishes drown. Ordinary personnel and back-personnel – is personnel that is the first one to catch “breath” of a market and “pulse” of its organization, but is, feedback wise, on a maximum distance from shareholders and first persons.
Going back to the basics of theory for managing an organization, I really like this formulation: “Management is an ART TO ADMINISTRATE PEOPLE”. I emphasize and specify: managing each one separately and everyone together. COORDINATED MANAGEMENT. That is art, in my opinion.
Not trying to convince-motivate You – Dear reader, in necessity of further offered by me actions, I just want to note, that management – is an art because it offers variations to solving problems, proceeding from a lot of data, demanded weekends and existing limitations.
The first and one of the defining actions I would recommend to do is to carry out negotiations on interests of shareholders and top-management. Organization is born and dies out because of the “head”… In this article we are not going to look at a situation when shareholders participate in operative management. It is a separate big (and often a defining) problem in an organization on separating functions of an owner and an administrator, for which a separate research can and must be done. Let’s look at a variant of contract executive management. Most of the time, such top-management is oriented on current and intermediate-term perspective, in motivation-financial plan as well as in viewing their place and role in concrete organization. Current and intermediate-term actions, and consequently, results sometimes may contradict strategic problems. Thus, it is necessary to implement in planning of activity and estimation of work of top management such parameters which would motivate to achieve “big” goals and would compensate possible proved instant decreases of current profit. In addition to that, I would recommend implementing parameters, which would motivate top-management to develop organization’s personnel, understanding, that professionally strong and team-rallied collective is a very serious and long-term competitive advantage. This problem needs a serious approach; so consequently, its solution needs to be motivated. One HR-Director without any help and support from the entire top-management can’t do much. Aspects of mutual relations are a subject to development and coordination: results, which an organization has to achieve as a whole within deadlines; roles, duties and responsibility of top-personnel; horizons of cooperation; career planning; conditions of financial and social mutual relations and so on. Thus, precisely and unequivocally having coordinated positions of “Customer” of-shareholders and “Executor” of-top-personnel you can be assured in minimization of risks of unpredictable actions of top-management, in identical understanding of strategy (perspectives) of growth, in authentic translation of vision, plans and problems on lower level of hierarchy.
Managers of average group of employees. It is the most inertial level of management, “buffer” between desires of shareholders and possibilities of ordinary personnel. Usually in a moment when motivation is seriously thought about, certain roles and spheres of influence in a company on this level are already won and distributed. One category of managers is fully satisfied with such positioning; hence, they don’t want any changes or innovations. Stability, more precisely, invariance of existence – is the main criteria of desires. For an organization such position is a serious slow down. Another category of managers – on the contrary, shows a desire to actively self-develop, realize accumulated experience. However, such manager not always is able to see opportunity for self-development in his own organization and companies often enough lose the most perspective leaders. Coordination of corporate and personal interests on this level helps adequately re-translate strategic problems of a business, achieve wholesome understanding of corporate strategy. Inevitably there should be a joint development and acceptance of a program of actions to achieve strategic goals on all division levels, personal motivation and responsibility, precisely coordination to achieve chosen parameters of efficiency. Also, parameters, motivating personnel of a certain division in an organization to develop are being implemented; vertical and horizontal personal career growth is planned.
Ordinary employees. Basically duplicates previous procedure with the only difference that choice of parameters is simplified.
In the motivation system for each employee of an enterprise there definitely have to be a few categories of parameters implied. At least, parameters of activity of an organization, parameters of activity of its divisions and personal parameters. This principle causes emotional resistance quite often. Especially among linear heads and ordinary employees. Each worker within the limits of his functional possibilities may influence in various ways or not directly influence achievements in different categories of parameters. But! Direct or indirect influence of each one is important. Importance at times may be defined not only by personal contribution, but by being interested in achieving general results, forming atmosphere of such interest, that by itself is already an objective resource for business development. Define differences in each described group will be only ranging and defining weight values of parameters. The higher the level of management – the greater the weight value should be of motivational parameters, reflecting activity of divisions and an organization in general.
Thus, on all “human space” of an organization, coordinated and within mutual interests, motivational atmosphere is being built, which stimulates everyone together and each member of a collective separately to achieve strategic goals of an organization. In the development process of motivational system and coordination of interests, all employees unwillingly get engaged in plans for development of their enterprise, start working on developing programs, projects and events to achieve those plans, because there is a direct dependence of personal well-being coming from summed up results of personal activity, activity of his division and entire organization. All members of collective become ACCOMPLICES of creative process; the real command of adherents is formed.
During development and implementation of motivational-development approach, often a question arises among members of the project command: is it necessary to be engaged in such laborious work with each employee, for example, with the storekeeper, or paying attention to key administrative positions is enough? The answer is obvious from the question. What do you want to achieve in the end? If there is a local problem stated to make management better, then it is possible to work within limits higher and average levels of management. If the problem is to really create a client-oriented organization, which will be facing a client with all its divisions and official positions without exceptions, then corresponding motivation should be developed for a General Director, as well as for a bookkeeper, as well as for a yard keeper. In today’s situation, when quality and nomenclature of goods of various producers are becoming comparable, it is the client orientation of each employee which becomes the defining argument to chose a partner, and form loyal clientele.
Real examples from experience. Seed-growing agro-firm, which has farms among clients. Will the farmer be willing to travel all the way back to the firm for more seeds if his rented car is just standing there because of the slowness and laziness of the storekeeper, or if he, Person-working-on-land will hear something mean addressed to him? Definitely no! And on contrary. If he sees real interest towards him and respect for his hard work, then he most probably won’t be looking for anything better. And as we know, rumors fly faster than the wind, forming public opinion, which in many spheres of business, agriculture in particular, is defining when choosing partners. But to reach such result, it is necessary to put a lot of effort, develop and coordinate motivation of a storekeeper. Results, as experience shows, are worth it! Think and answer honestly just to yourself, how are the “storekeepers” motivated in your business?
Another example from fitness-industry. Moscow elite fitness club. New building. The most up-to-date simulators. Respected managing company. Price of services defines category of clients – above average. Among regularly participating and caring about their health clients are people from high echelon of governing the country and business elites. And at the same time, the entire club has warnings on the walls, “glued” with tape, with angry instructions on how to use equipment, clean after yourself (“If you’re not a loser, friend – clean everything around you!”), watch your stuff, in showers – cheap soap, no shampoos or conditioners and etc. Having the privilege to compare, unwillingly you start thinking, is it a modern capital elite fitness-club or soviet factory sport complex? Who’s more important in the club – client or the manager? And let’s not forget there are more and more competitors arising around. That’s the nature of business – satisfying needs of clients. Good place can never be empty, so don’t bite the arm, that’s feeding you. Or translating it to a management language, if you want high profit and stable clientele – build business processes, think about client-orientation, about qualification and motivation of personnel – there are never tiny details in business (especially in a sphere of service)!
It is necessary to not a number of accompanying positive effects when using motivational-development approach in business management, such as, for example, increase in workers’ satisfaction. A person starts feeling not like a depersonalized little “screw” in the big corporate “mechanism”, but as an important persona, who conducts his own well-being and who is relied on for general success. He directly and thoughtfully commits with a part of his destiny to corporate interests, particularly refracting strategic and operative plans and results, planning from that personal development, improving social conditions and conditions of life and other components of personal and family life.
During coordination of personal goals and corporate problems, often there is a specification or redistribution of personal functional duties – which is another accompanying positive effect of such approach and a very important independent element of organizational development.
As our experience of implementation shows, such approach integrates in well with high synergetic effect with modern management techniques – project management, learning organization, managing goals, key performance indicators, balances scorecard, total management of quality and other.
Resuming what was said above about motivational-development approach in business management, it is becoming obvious that cardinal improvement of management, total focus of a collective on achieving strategic business plans can be reached through counter forming of interests of every employee via a JOINT coordination and specification of personal goals and problems, coordination of that with business goals and defining motivation, which depends on his personal achievements and on results of company’s work within the frames of set parameters for perspective development.
Business-team (Ukraine), #1/2008
Profession DIRECTOR, 03.2008
National Business, March 2008
E-xecutive, March 25, 2008 http://www.e-xecutive.ru/community/articles/687175/
I ¹1, June, 2008
Good day, Konstantin Yurievich!
It was a pleasure reading Your article “Managing business: motivational-developing approach”… Approach of “from general to concrete” is mentally close to me, that is why I re-read with pleasure: “First action…meet an agreement of interests between shareholders and top-management”. It is very true that there will be no motivational system directed on long term perspectives for development in the conditions of absence of that long term perspective for development, written on a paper. With Your statement of a question on decomposition of top level of parameters on everything, including "storekeepers", I agree absolutely.
Moreover, I can give You a life example, which visibly illustrates the usefulness of such “decomposition”.
Trading-purchasing company. There is a system of motivation in which not all are “registered”. Logic – “Not everyone are engaged in sales! Why waste all this money purposeless?” Situation: department trading facing materials, has moved from office building to a building of a warehouse. And for several days security staff was telling disappointed buyers: " yes they have moved... " until this dialogue wasn’t heard by the GD of this enterprise. Security staff have shown signs of obedience and quite loyal attitude towards visitors, which hasn’t been seen before. For that system not to become another subjective whip (and who and how has counted?), it is important for calculations to be sewed in a single automated control system!
Examples of the “opposite”.
1.Construction company. Motivation cards were developed for the personnel. Everything seemed beautiful and logical, but the superintendents and masters have declared strike, accusing economists in erroneous calculations. The proprietor has invited us. We have checked and agreed with masters, simultaneously showing the proprietor that even the profit of the enterprise is calculated incorrect.
2. Large holding, specializing in repairing building technology. Before going into “the strategy” owner has signed a contract with English supplier of tools (planned big re-equipment). Along with that he is a GD of his daughters motivated on profit, but when calculating profit (using administrative registration policy) all Fixed Capital was written off as expenses, instead of through amortization. He explained this to me: “I want it this way, no need to make this complex, let the accountants calculate amortization, I don’t need it”. Consequently, his deal on receiving that tool almost “broke”. All directors as one were “beating off” the deliveries, having calculated correct that the next three years or so they will have to live off their salary. And the owner has long forgotten about amortization issue and couldn’t understand why there was such a change in relationship.
This list of examples can go on….
This is for when listing steps to building “Motivational-development system for managing business”, there are important steps in setting up and automation of management in complex: strategic management, budget management, process management, project management. United informational field of management will allow the opportunity to get objective indicators of actions of each employee.
General Director "Intalev-Ural" Ltd.
Yekaterinburg, March 27th 2008