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ManagementHOW TO HAVE YOUR CAKE AND EAT ITCharles Handy has raised the bakery for his latest theory on management. Here, the celebrated management thinker explains how an irresistible piece of confectionery holds the key to creative management in the workplace. Creativity is too good a thing to be rationed. Putting it in a box on the organisation chart, even if you call the box a skunkworks*, ignores all the latent creativity that is hiding in the everyday workplace. Instead of bottling it up, he urges organisations to treat insiders like outsiders and to follow the “doughnut” principle. Organisations realised some time ago that they no longer needed to have all the people in the same place at the same time in order to get things dome. A simple and obvious fact, perhaps, but it contained the seeds of an organisational revolution. It will now be in the interests of the provider as well as the purchaser to investigate improvements both in the design of the product or service and in the way the work is done, as long as the benefits are shared. Sadly, in spite of some good intentions, it does not often work that way for ordinary employees. The reason is simple – although anyone can have ideas, doing something with them involves both time and trouble. Employees do not always realise that they have given away any rights to the fruits of their ideas when they accepted their employment contract. Few people are prepared to stick their necks out to test or develop a new idea unless there is something in it for them. On the face of it, then, organisations should strive to arrange as much as possible of their work on an outplacement basis, with managers becoming, in effect, purchasing officers. Perhaps they already have. In Britain two-thirds of registered businesses have only one employee, the owner and 80 per cent have fewer than five employees. Most of them sell not to the general public but to other organisations. They are the new outsiders. Add together these independent businesses and the self-employed, the part-timers who make up 25% of the workforce, plus the temporary workers, those in training and the unemployed, and the truth is that less than half of the British labour force is in a proper full-time job while at least one quarter of any organisation’s true workforce is outside. Some now think that outsourcing has gone too far, that we are in danger of creating hollow organisations in which the only people left inside are a few contract managers and accountants. Such organisations, it is claimed, can lose their soul and their reason for existence as well as the continued commitment of the subcontractors, who, in the end, are only accountable to themselves. There is a good deal of truth in this. But in pulling some operations back inside we don’t need to discard all the benefits of their independence. We could treat many insiders as outsiders, managing their outcomes rather than their processes. This is the doughnut principle of management. In the doughnut management theory the solid core in the middle represents the essential requirement of the job, the things that have to be done no matter what. But the responsibilities don’t end there. The white space is the opportunity for initiative and creativity, for going beyond the manual, for adding extra value, for getting more out of less. There is however, a boundary, an official limit to discretion – the line beyond which one should not go. In old-fashioned organisations there was little room for discretion in most jobs. The core filled most of the doughnut. In one job in an international oil company he had an imposing job title – Regional Co-ordinator Marketing, Mediterranean Region excluding France. The job description ran to three foolscap pages, long list of things he was required to do, mostly to do with passing information back and forth. At the bottom there was an item headed Authorities. It read ‘authority to initiate expenditure on own account up to a maximum of ten pounds’. That was the white space of his doughnut. It was not much of an invitation to creativity. That, however, was how most organisations used to work in the past. Everything, as far as possible, was tightly prescribed and controlled. Organisations were designed like railway timetables, with all activities neatly dovetailed together. Then, in an ideal world, you pressed a button and it all worked like clockwork. In such an organisation you did not want the train driver to us his imagination or to try out quicker route. The doughnut principle substitutes effectiveness for efficiency. Efficiency seeks to minimise costs given a particular outcome; effectiveness is more concerned with improving the outcome and so will accept higher costs for higher outputs. The doughnut idea requires managers to treat insiders as outsiders, to negotiate with groups, specifying minimum delivery requirements, the central core of the doughnut, and the general aims of the project, paying for any increase over the specified minimum outcome. They would be treated as far as possible as independent contractors, as outsiders, but would still be insiders, full members of the organisation with all that it meant for security of employment, career development and the sense of belonging to something bigger than themselves. The group would, however, have every incentive to improve productivity and be creative and would have the space to experiment within their areas of discretion. Incentive and opportunity are the two necessary preconditions of creativity in organisations. Does it work, treating insiders like outsiders? Ricardo Semler finds that it does. His radical organisation, Semco, in Brazil, encourages every group to think for themselves as a small business. If they come up with a new business idea and the Board gives it the go-ahead, they are required to organise it and they get to keep a proportion, sometimes up to half, of the resulting profits. As a result Semco has grown from a small factory producing marine pumps and industrial mixers into a federation of some sixteen companies including ten internet ventures, all financed from their own earnings. The workers are free to appoint their own leaders, to agree their own pay, within defined limits, and their own hours of work. Semler called his latest book ‘The Seven-Day Weekend’ to make the point that his workers are free to work as and where they like provided they deliver the goods. Semler says: “Once employees feel challenged, invigorated and productive, their efforts will naturally translate into profit and growth for the organisation.” In the end, doughnuts are built on trust. The occupants of the doughnuts have to be left alone to get on with it. Trust is more easily given to those whom one knows well over time. It should, therefore, be easier to trust insiders rather than outsiders, yet, perversely; we give a freer rein to outside contractors than we do our own workforce. That has to be bizarre. Designing doughnuts should be the new organisational priority, finding ways to treat insiders as outsiders and outsiders as insiders and sharing the results. If the organisation charts look untidy, don’t worry. Management thinker Charles Handy is a contributor to the space for ideas campaign run by the East of England Development Agency. His essay Turning Doughnuts Inside Out, along with other essays on creativity in business can be found at www.spaceforideas.uk.com/index.shtml *Skunkworks – a fast moving group working at the edge of the organisation structure with aim of accelerating the innovation process. The term Skunkworks was popularised by Tom Peters and Bob Waterman in ‘A Passion for Excellence’ (1984)www.tompeters.com Source: Professional Manager Click here to visit Professional Manager TOO TIRED TO WORK? Obesity, acne, leprosy, tiredness and gout – just five of the 480 complaints cited by Britain's 2.7m recipients of incapacity benefit last year. Now the government wants to crack down on our 'sick note' culture by introducing a new disability test that could cut this number by a third. Work and Pensions minister Peter Hain said on Monday that the government was bringing in a new test designed to get more people back into work. Instead of focusing on proof of disability, the focus will be on working out what claimants can do – so even if you can’t lug heavy boxes around, you might be perfectly capable of sitting in front of a computer screen all day looking at Facebook with other office staff. The Government’s figures attest either to the growing ills of modern society, or to the imaginative lengths we’ll go to in order to get out of work. People who are too fat to leave the house are receiving £4.4m a year in incapacity benefits. Fifty people got signed off with acne. Nearly 100,000 alcoholics and drug addicts received a total of £130m because they couldn’t work. And 200 people got a doctor’s note because of swollen testicles. Hain claimed today that the changes were designed to help claimants, but there’s another compelling reason: incapacity benefits are costing the UK taxpayer £7.4bn a year. And as far as the government is concerned, chopping a few billion from this budget is much more straightforward politically than taking it out of the pockets of entrepreneurs, for example. Of course, its track record in this area leaves a little to be desired. Although the number of claimants has remained fairly steady in recent years (after trebling since 1979), Labour has made promises in the past about cutting down abuses and failed to deliver. Tony Blair famously told MP Frank Field to ‘think the unthinkable’ on welfare reform – and then ignored him completely. And since the effect of a crack-down on incapacity benefit may just be to transfer more people onto the official unemployment figures, perhaps that’s not surprising… Naturally we’d never object to new rules that make it harder to cheat the system. But let’s just hope that in this latest drive to get the incapacity bill down, it doesn’t end up being the genuinely needy who pay the price. Source: www.managementtoday.co.uk/News Monday - 28 April 2008 Features New points of entry The government recently introduced what it described as the biggest changes to immigration policy in a generation. And recruiters should get to grips with the new legislation, not only to advise clients but also to avoid strict penalties. Colin Cottell investigates Whether it is to do those jobs that the UK's indigenous population consider beneath them or to fill the skills gap at the upper echelons of the jobs market, few can now imagine the UK workforce without people from the four corners of the globe. However, while virtually everyone agrees that migration is here to stay that doesn't mean that the rules on immigration remain set in stone. At the end of February, the government introduced a raft of changes that home secretary Jacqui Smith described as "the biggest changes to British immigration policy in a generation". These days clients expect recruiters to keep up-to-date on legislation. As Debbie Burke, managing director and owner of generalist recruitment agency ROC, says: "Clients expect us to be able to advise them on issues like this from a general perspective." Legislation changes One of the major changes is the introduction of a new points based system for people from non-EEA countries who wish to work in the UK. Based on a model used in Australia that is widely acknowledged to work well, this replaces the previous 80 entry routes into the UK with just five tiers (see box below). Under the new rules, employers who wish to employ people from outside the EEA under tier 2 are required to register with the Border & Immigration Authority (BIA) and obtain a licence to act as a sponsor, says Jennifer Lambe, a specialist immigration lawyer at Mishcon de Reya. Employers will be required to appoint an authorising officer, who will be entitled to issue certificates to prospective employees. Employers must ensure that all applicants provide evidence of their right to work in the UK before starting work (see box for penalties for non-compliance). Registration is now open; however, the implementation of the sponsorship phase for tier 2 is not expected to be rolled out until the third quarter of 2008, says Lambe. Full details and a timetable for tiers 3 and 5 are not yet clear, she adds. Applications from individuals living abroad will be submitted to British diplomatic posts abroad as opposed to the BIA in the UK. Decisions on individuals' cases will be made in the county from where the applicant made the application, and there is no right of appeal — only reviews, says Lambe. A further change, says Lambe, is the introduction of an English language requirement for tier 2 work permit holders, something that already existed under the Highly Skilled Migrant Workers Programme. "This requirement is fairly high," says Lambe. Applicants will also be required to show that they will not be a drain on the UK public purse by providing themselves and their dependents when they reach the UK. This could be up to £10,000 for a family, says Lambe, suggesting that this would be difficult even for many professional families working in the UK. Applications under tier 2 are made after a person has received a job offer and a certificate of sponsorship. An applicant's points score is based on a number of criteria. These are: earnings, education, English language ability, and ability to maintain themselves and their family in the UK. Lambe says that 95 points will be required to 'pass' the test under tier 1 (the former Highly Skilled Migrant Workers Programme) but that no points requirement has yet been set for tier 2. A person who gets the requisite number of points will then have entry clearance to take up the job they have been offered in the UK. Lambe says that although the new system has been designed to speed up the process, employers should "expect delays" while the new system beds in. This is undoubtedly a major shake up in the UK's immigration system. But what will it mean for recruiters? Matthew Pegram, engineering and technical recruiter NES's registered OISC (Office of the Immigration Services Commissioner) immigration adviser, says the new system is a big improvement. "I do believe it is better because it replaces 80 existing entry routes into the UK with five or six." Pegram says that the new system will make it easier for NES to help individuals outside the EU to get sponsorship and visas. However, he accepts that some people will lose out. "Some people will lose out because of the English language requirement," he says, though he argues that it is "reasonable" for people to be able to show they can speak the English language if they wish to work here. Pegram says that those who will benefit from the new system will be the better educated, those with a history of high earnings and younger people. These people will score more points under the new system. He adds that the introduction of the new system will boost the demand from clients for recruiters who understand the new rules, and can advise both clients and candidates. Since NES is registered with the OISC, it is therefore formally authorised to give such advice, he says. However, he admits that there have been teething problems. Pegram says that one contract had to be stopped because a New Zealander who had been here working in the UK on a holiday visa had to return to New Zealand to switch to tier 1. Previously this switch could have been made without the person returning home. "The new system is designed to be quicker and better, but whether it is or not is another matter," he adds. Richard Lawrance, managing director of construction, engineering and transport recruiter Resourcing Solutions, says that without the ability to attract skilled staff from abroad, "we are struggling [both as a business and as a country]". He adds: "The points based system will give us a sense of what people are going to be an attractive proposition for the UK as a whole rather than just for individual employers." Ann Swain, chief executive at the Association of Technology Staffing Companies (ATSCo), says that the new points based system is "undoubtedly a good thing and is long overdue. The reality is that if you are going to bring in people from outside it needs to be on the basis that there is a shortage of certain skills, which there is." However, Swain says that a major concern is whether 'inter-company transfers' will be included in the new system. She says that some Indian software companies are bringing people in 'under the radar' by transferring their employees to a London office. "This has nothing to do with whether these skills are in the UK. It's to do with paying them rubbish money," she argues. Popi Galani, divisional manager at People Unlimited, a social care recruiter whose candidates come predominantly from Africa, is concerned that the new system is biased against more lowly skilled workers and that this will have a negative effect on her business. She says that the care workers her company supplies will suffer under the new system because they are not as well qualified as RGNs (Registered General Nurses) and most of them will not have previous experience when entering Britain. Nor do they have the required skills for Care or NVQ2 training. As a result, she says she "very much doubts they will score highly". This is likely to have a knock-on effect on her business, she predicts. "Potentially, it will decrease the number of new candidates to the business by at least 30%," she says. "The profession does not have a high image, does not offer high pay packages and it is already hard bringing young people into the profession." And Galani fears there could be other consequences. "My concern is that because the new points based system doesn't support non-highly skilled workers, it will encourage more criminal activity, and more fraud." She says there are real problems of war and poverty around the world, and whatever system is devised won't stop people coming to the UK for work. "They will just make the documentation they use better," she says. Key points of the new points based system Implementation began 29 February 2008 • 80 entry routes replaced by five categories or tiers • Five tiers: 1 Highly skilled individuals who contribute to growth and productivity (previously known as the Highly Skilled Migrant Workers Programme) 2 Skilled workers with a job offer to fill gaps in the labour force 3 Low-skilled workers to fill temporary labour shortages 4 Students 5 People coming to the UK for non-economic reasons Under tier 2 • Employers become formal sponsors • Employers register with the BIA (Border & Immigration Authority) and apply for a licence to sponsor an individual for a specific job • Applicant usually applies for entry clearance to UK from country of origin Penalties for non-compliance • Removal of employers from sponsorship register or restricting their ability to employ migrants • Criminal offence of knowingly employing illegal migrant workers (unlimited fine, imprisonment of up to two years) • Civil offence of employing illegal migrant workers (fines of up to £10,000 per worker) Responsibilities of employers • Duty to inform BIA if migrants do not show up or are absent for a significant period • Must keep proper records – contact records of migrant worker • Appoint key BIA contacts; in particular, an authorising officer Souce: Mishcon de Reya Solicitirs |
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