The staring point should be that of documenting all that is required from the new recruit - in the form of a job description and person specification. This is followed by the identification of the characteristics of a leader that suitably fit the organisation's strategy. Needless to say, the organisation should then identify ways and means of attracting proper applicant for the arisen post/need. It is noted that the 'local newspaper advertisement' remains the most popular, however the 'head-hunting' technique is without doubt recommended for the recruitment of future leaders.
The selection process kicks-off with the receipt of application forms from which short-listing (possibly after a longer one) will be formed. This time, it is discovered that the 'selection interview' is widely used and possibly combined with other methods such as 'in-tray exercises'. Obviously it is not the only technique as there are numerous methods that could be adopted such as the 'bio-data analysis', 'personality testing', 'competency testing' and 'personal inventories'.
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The second part of this report points out that organisational culture is created by the early leaders who are there to take action and exercise decision-making on the basis of their knowledge and skill. Organisational culture is a key element used by leaders to achieve the corporate goals.
The report goes on to point out that it is the responsibility of the leaders to take proper actions to create or change/effect culture, if need to. It is also noted that 'transactional leadership' which abides by the limits of the firm is not as suitable as the 'transformational' approach. Changing culture is not an easy task as culture will resist all the ideas that suggest different way of approaching situations. Therefore, in order to be successful it has to be part of an organizational change. In this respect, leaders have to continuously support, motivate and reward congruent behaviour. Additionally, they have to make sure that implementation stages affect behaviour while aligning support systems to recognize desirable behaviour and discouraging incongruent ones.
The third part of this report examines the NPD, and it reveals that continuous NPD is a key indicator of future success - where a FSO is invariably meeting the ever-changing customers' needs. This report presents a seven-step process which includes amongst others the following;
Idea generation through many sources
Screening which more often than not takes place in two stages
Concept development and testing
Product and marketing mix development
The report comes to an end with the importance of product development for FSOs. It is concluded that NPD helps organizations to further capitalize in their brand image. Moreover it helps an organization in building a competitive advantage over its competitors which in turn helps to sustain the firm's strategic direction. It can be seen from a view that affects human resources as new products brings opportunities for growth and thus more vacancies and career development.
2 Terms of reference
After the meeting held on 15 January 2011 between the executive staff and the board of directors of HSBC Bank (Malta) Plc, Mr Edward Cachia, CEO - appointed me to produce a report for the senior executive team, addressing inter alia the following issues which were raised in the said meeting;
Recruiting and selecting future leaders
The importance of leadership in organisational culture
New Product Development (NPD) and its importance
The scope of this report is mainly to be used as an initial research the senior executive team of this organisation is implementing with the aim to reform the above mentioned areas. This report was to be submitted by 17 March 2011.
This report will look at:
How FSOs recruit and select future leaders, and the processes adopted by them
The effects of leadership on organizational culture and how will leaders create and change culture in order to achieve the corporate goals
The NPD, its process and the importance of product development in the financial services industry
The recommendations to be successful as much as possible in above areas
4.1 Recruiting and selecting future leaders (Part I)
Always on Time
Marked to Standard
4.1.1 Recruiting the best characteristics
Many organisations find themselves in a dilemma of how to recruit, select and nurture future leaders. Questions like: 'Who will be the future leaders of our organisation?' - 'How successful leaders are identified, and from where they come from?' will be raised. However as we are all aware, it is very unlikely that the present work force will last forever - someday in future, current leaders have to be replaced by others as a result of retirement, redundancy, business expansion, change, and so on. The recruitment, selection and subsequently the training and development of future leaders can be of a significance cost for the organisation, therefore any existing cost-conscious organisation will find itself reluctant to waste the allocated budget. Nevertheless, there are certain steps which cannot be overlooked in order to be successful in this task.
The inevitable starting point will involve the organisation to complete the job analysis which in turn forms a basis for a job description and a person specification. At this point the organisation has documented what is expected from the selected candidate to perform all the tasks and activities, and to exercise the responsibilities related with the post. In addition to this information, the organisation will record the competencies and type of person required.
The next and most probably fundamental step is to analyze and define the characteristics that the organisation will value in one of its leaders. This relies mostly on the structure of the organisation, the strategy pursued and the existent culture. A successful leader in an organisation has to obviously believe in the same organisation, live its culture and contributes to its strategy. In this respect, an effective way of doing this, an organisation could look into and try to match the characteristics of leaders who were, or who are successful in the organisation.
One has to say that, no two persons would ever agree on the exact characteristics of a 'good leader' as every good quality or virtue will be listed. However many would agree that it is part of the leader's job to be known to all the members of the organisation he/she makes part of, and it is much better to be recognized than popular. Moreover, a good leader should inspire trust and confidence in his subordinates, be assertive, posses relevant decision-making and communication skills. This statement is sustained by Lord Montgomery where in his book Path to Leadership, typified a leader as:
"â€¦one who can be looked up to, whose personal judgment is trusted, who can inspire and warm the hearts of those he leads, gaining their trust and confidence and explaining what is needed in language which can be understood."
Once the characteristics of a 'good leader', that suitably fit the organisation's requirements have been identified, the organisation must be able to use effective techniques and practices to attract the suitable applicants' attention (internally and/or externally) to apply for the particular job. From the various methods available, the 'local newspaper advertisement' remains the most popular; however recently there has been an increasing trend for the 'E-recruitment'.
'Head-hunting', which is remarkably recommended, may be a useful tool in recruiting a future leader - where an organisation approaches an individual (most probably a well-known successful person) and try convincing him to join it. Below is an example of a bank that befitted from the successful usage of this technique;
Banif Bank (Malta) plc, which opened its doors on the island in January 2008, approached and managed to recruit some experienced and successful leaders from the other major banks on the island through 'head-hunting'. This approach paid back as the bank although quite a new comer in the country has an experienced leadership and after some time is already considered one of the main players in the financial services industry in Malta.
Table 1.1 illustrates the extent of usage of recruitment methods by some organisations in the UK.
Table 1.1 Usage of various methods of recruitment by 803 organisations in 2006
Advertisement in local press 79%
Recruitment agencies 75%
Corporate website 75%
Specialist journals and trade press 66%
Jobcentre plus 51%
Word of mouth/speculative applications 49%
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Employee referral scheme 47%
National newspaper advertisement 45%
Education liaison 37%
Apprentices/work placements/secondments 36%
Commercial Job-board Internet sites 16%
Source: Table compiled from data in CIPD (2006) Recruitment, Retention and Turnover: Annual Survey Report.
From the application forms received the organisation should be able to decide whether an applicant could become a candidate for a form of analysis/test i.e. a prima facie evidence of the suitability or unsuitability of the applicant for the post (Cole, 1996). Hence, a short-list, (possibly even after a longer one - on the basis of the volume of applications) enlisting those applicants that meet the predetermined criteria extracted from the job description and person specification will be composed. To further sustain the analyses/decision, some organisations ask for a reference - preferably from the previous employer. Needless to say, this does not take place in the 'head hunting' scenario.
22.214.171.124 Suitable Selection Methods
The selection process is a two-way process, in the sense that the applicant is assessing the organisation the same as it is assessing him/her. A possible future leader will definitely take note of the ambience, atmosphere, staff approach and how well planned. Therefore the selection method chosen affects in no small way the desirability of the applicant to join the organisation.
Certain selection techniques are suitable for different types of positions; however there is no golden rule. The mostly adopted approach remains the 'selection interview' - though many management theorists point out that in reality many recruiting organisations adopt a mixture of two or more approaches as relying on a single technique may be insufficient and unreliable. For example, an organisation may combine a 'selection interview' with some 'in-tray exercises' and 'aptitude tests'. When an organisation meets an applicant in person it will be able to fill in the 'gaps' of the application form in terms of skills, attitudes, behaviours, personality and ability. Per contra some years ago, Laszlo Bock, VP of People Operations at Google, was quoted in the New York Times saying, "Interviews are a terrible predictor of performance." This idea suggests that interviewees, if well planned, during the interview may be capable to give you the answers you are expecting, but at the place of work they are non-performers. Against this backdrop, it is still being recommended
Other suitable selection techniques that may detect leadership characteristics in applicants may include the following:
Bio data analysis:
The organisation represents the applicant a set of questions about factual kinds such as life and work experience. The results of the analysis are compared to past or present leaders' performance, as the past behaviour is the best predictor of future behaviour.
Writing, communication, planning and deciding technical exercises will provide a useful insight of the candidate's basic skill level relative to successful leaders.
Presonality/work style testing:
Many tools exist under this umbrella such as DISC and Kolbe; these are crucial in determining the candidate's skills, motivators, how he/she thinks, preferred working environment, etc.
Seek the self-perception of the candidate on different aspects, and again compare with successful leaders.
It is of extreme importance that an organisation follow its gut instincts - if one is not trusting the candidate from the early stages, further investigation should take place as if this is overlooked will only cause waste of time and financial hardships later.
4.2 The importance of leadership in organisational culture (Part II)
4.2.1 Organisational culture
Organisational culture is created when the early leaders of an organisation, most probably the founder(s), make decisions and take action based on their personal skill and knowledge. If these work, the leaders continue to exercise further decision-making and take actions - forming a way of thinking and approaching things, and if success continues, a culture embracing these 'successful ways of doing things' is created deliberately over time. In this respect, culture may be defined as "The way of doing things around here" (Burke and Litwin, 1989). Therefore each and every organisation has its own unique culture i.e. its identity/DNA.
As the culture matures, the members begin to share a set of common values and accepted behaviours. And if success continues to rein, then stories are formed which are recounted to new members - which will serve as an example of being successful in thinking and acting in the 'correct way'.
126.96.36.199 Culture Vs Change
As leaders of financial services organisations analyze and where possible review their business models with a view to achieve the corporate goals, a key element (although sometimes it is overlooked) is indeed organisational culture. The greater the degree of change required, the more fruitful it is to re-look the existing culture of an organisation to detect whether it will serve as a 'way forward' to change and improvement, or if it will defend the 'status quo approach'. Actually there is also a strong financial justification to incorporate the culture as a basis for performance and hence achieving the corporate goals. The results of a study by Kotter and Heskett (1992) - comparing the financial performance of 'high-performance cultures' vs. the rest - sustains this statement. Table 2.1 refers.
Table 2.1 Corporate Culture's Impact on Long-Term Economic Performance*
High Performance Culture The Rest
+ 682% Revenue + 166%
+ 282% Workforce Expansion + 36%
+ 901% Stock-price Growth + 74%
+ 756% Net Income + 1%
* Over 11-year time frame
Source: Kotter and Heskett
One has to say however, that culture oppose change and will seriously resist any idea that is not part of its acceptable behavioural framework. By its nature, culture prefers the 'tried' approaches. This makes more sense in organisations with a successful history i.e. why re-invent the wheel, when there are proven successful approaches? As long as the culture adjust with and 'accepts' appropriate strategy the organisation may decide to follow, the stronger the culture the more the organisation performs. In this regard, it is the role of the leadership to reinforce the existing culture by modeling, communicating and rewarding 'congruent' behaviour. Edgar Schein (1992) points out that "leadership and culture are two sides of the same coin. Leaders create and change culture, while managers live within them." On the other hand, in the case where the existing culture is not open for change, in the long run 'transactional leadership' will be the death sentence of the same organisation, whereas 'transformational leadership' would be more appropriate in transforming the existing culture to a more adaptable one.
4.2.2 Creating Healthy Cultures
As pointed out above, the stronger the culture, the more resistant it is to change (Maister, 1997). So the things that make the organisation successful and prosperous today may be the same things that serve as a barrier for growth in future. The more successful we are now, the more our culture will resist change. The obvious question is - So how will we sustain our performance?
This is a challenge and somehow a dilemma for the organisation's leadership to create and build a culture where perpetual change has to be one of its permanent elements (Schein, 1992). By being able to do so, the culture will be able to conserve its strength while continuously adapting to shift in the environment. Alexander (1999) emphasize that there are three core elements in a culture namely, contribution, candor and constant learning which are adaptable to all 'culture models' and supportable over time. In simple terms, these elements encompass change and allow each adopted culture model to outshine in its unique area of strength.
188.8.131.52 Changing Culture - Leadership action
This is the tough part. It is the situation where leadership has to 'revamp' the existing organisational culture in order to be successful in achieving the corporate goals. As discussed earlier in this report, the more successful the organisation has been in the past, the more challenging this task is.
Before any attempt, the leadership has to raise awareness and create a sense of crisis i.e. the ability to make the employees believe in the change, and if this does not occur, the existing cultural values are at risk. It is not an easy assignment, therefore continuous support and motivation are mostly advised for such situations. Without the will and input of the whole team, the change will happen in a slower pace, or not happen at all. In addition leaders have to keep in mind that some segments of the employees will resist change more than others. For example, an aging workforce will definitely resist technology more than young generation workforce.
Culture change is only appropriate and successful if it is part of a whole organisational change, in the sense that it must be based on the business strategy that caters for this 'new organisational culture'. If the leaders of the organisation are successful in this task, then the organisation may avoid future crises or undesirable situations. To build a credible culture for the future, it is equally important for the leaders to make sure that the implementation stages of this new strategy will affect behaviour of employees in order to have a congruent direction of the entire organisation in achieving its corporate goals.
This entirely means that the employees have to 'act' and behave differently from what they tend to normally do. To overcome apathy, leaders have to make sure that all support systems are aligned to recognize and reward 'desirable' behaviour while discouraging the business-as-usual approach. Evenly important is to inform the employees of the 'new organisation' and its advantageous aspects. Some good leaders will definitely try to involve its subordinates in the process to get to take personal ownership of it.
Organisation culture is a major aid to success or failure. By its very nature, it can prove to be resistant to change. However, smart leaders with the will to change, will manage to build and support a strong and sustainable culture for their respective organisations. The results of such will definitely help the organisation being successful in achieving its corporate goals and as a result more befitting to its stakeholders.
4.3 New Product Development (NPD) (Part III)
Because of the constant changing needs of customers, markets and competition in the financial services industry, product development is a key indicator of future long-term success for any existent FSO. But the question is 'what is a new product?' - Well in absolute sense, something new is something that never existed before. In reality, something that has not been experienced before is perceived as new. When it comes to define a 'new product' the latter reasoning makes more sense, as whether or not something is completely new, stakeholders who have not yet experienced it may provide opportunities for reconsideration (Robert R J, 1993).
4.3.2 The Process
This report is presenting a seven-step process comprising the important steps in the NPD. While some organisations do not follow a step-by-step approach, the steps are important in showing the retrieve of information and decision making to successfully develop a new product. The process also shows the important role market research plays in NPD.
I. Idea generation (internal and external sources):
The first step of NPD requires gathering data to be evaluated as potential product options. For many organisations this is an ongoing process of gathering information from inside and outside the organisation. Many market research techniques are used to enhance data researching such as focus groups with customers, members and sales team; encouraging customers' comments and suggestions; and gaining understanding of competitive products' development through secondary data sources. One important technique to use is brain-storming - where open-minded, creative thinkers come together to 'brainstorm' the subject. The advantage is that an idea will spark another; this will yield a wide range of extended and varied ideas. One has to keep in mind that very little number of ideas ever become products, therefore the more ideas one could get, the better.
The ideas generated above are examined with the aim to extract from them the ideas that are likely to be of benefit for the organisation, thus they will pass to the development stage. Much effort is given in this stage, as after this stage and the development stage, the costs of ideas begin to augment substantially. Ideally ideas are compared to predetermined set of criteria and more often than not, screening is done into two stages i.e. the primary screening and the secondary screening. The former stage involves eliminating those ideas that clearly do not fit the organisation's strategy and structure, and which not justify the costs of evolving them. The secondary screening is a more detailed analysis of the residual ideas however it is sometimes referred to as the preliminary business analyses stage of NPD. Acceptable ideas move on the next stage.
III. Concept development and testing
With a few ideas in hand, a marketer now seeks to get initial feedback from the customers, suppliers and stakeholders. Generally, focus groups are assembled with the main aim to explore likes and dislikes of the concept, level of interest (demands) in purchasing the product (and frequency), and the likely price customers are willing to pay for the product. It is important to note that at this stage customers are exposed only to the idea.
IV. Business analysis:
At this stage, the organisation is left with one or two ideas which can potentially be transformed into a new product. The NPD becomes very dependant on the market research as the organisation is after the viability of the idea(s). The aim of this stage is to get useful forecasts of market size, operational costs, cash flows the product would generate and expected life cycle of the product. Much effort is recommended so as to determine whether the product fits the organisation's mission statement and strategy. Additionally, discussions on purchasing and production personnel and competitor analysis must not be overlooked.
V. Product and marketing mix development:
Ideas passing through the business analysis stage are given serious consideration for development. The organisation begins to design a prototype while marketers constructing a marketing plan for the proposed product. Once the prototype is ready, the organisation seeks customer's feedback. Unlike the concept development stage where customers were only exposed to product ideas, here customers get to experience the real product as well as other aspects of the marketing mix such as advertising, distribution channels and pricing. Favourable reactions will sustain the organisation's decision to introduce the product while less favourable reactions lead to adjustments.
VI. Test marketing:
Products surviving to this stage are ready for testing as real products. In some cases, organisations may rely on what was learnt from the concept testing and skip this stage. But other companies may seek for more input from a larger group before moving to the launch. The most common type of test marketing is to make the product available to selected segment, obviously, exposed to the full marketing products as they are to other existing products in the market.
VII. Product launch (Commercialization):
If market testing displays promising results the product is ready to be introduced to a wider market. At this stage, the product moves from the development phase of the product life cycle to the introduction.
4.3.3 The importance of the development of new products
An organisation which constantly develops new products entails itself to business benefits which in turn lead to prosperous returns. Such organisation, over time will build a sustainable competitive advantage in a selected segment as it is continually developing products to meet the changing needs of the same segment. As a result of the formulated competitive advantage, an organisation will further strengthen its strategic direction.
Organisations that over time invest in strengthening their brand position can use new product to further capitalize in their brand. This is done through what is called 'brand-extension', where an organisation may introduce a new product under its brand umbrella. If the NPD process is well followed and the product happens to be successful, then the organisation further develops and expands its brand.
Product development (if successful) can be seen from a view that affects human resources, as new products can create opportunities for more jobs and enhance career development possibilities.
Following is an example of an organisation that purely benefited from NPD;
In 1983, the sales of Compaq from $111 million grew to $3 billion till 1991. For this reason, Compaq became the first company to be listed in the Fortune 500 list in less than four years. This company has always relied on the strategy to be the first in the market to offer a stream of latest technology products related to personal computers. One has to mention that during the 1980s, Compaq has managed to come up with new products to their market. Compaq is an excellent example of an organisation that achieved remarkable success through successful NPD.
When it comes to recruitment and selection of future leaders, FSOs are adopting a systematic approach to ensure that all steps are followed and avoid financial hardships and waste of time in the future to replace bad recruitment.
The 'newspaper advertisement' remains one of the most powerful recruitment methods, however the 'headhunting' approach can be really valuable when it comes to leadership recruitment. It is also noted that FSOs use a combination or two or more selection techniques, with the 'selection interview' the most frequent used approach. In this regard, one has to mention however that a FSO may find itself reluctant to recruit and select a leader without meeting him/her in person.
Organisational culture is derived from the actions and decisions taken by the early leaders. This however has to reflect the mission statement while serve as an aid to achieve the corporate goals. Once again, leaders have some important roles to play in accomplishing this task - such as goal congruence, continuous support, motivation and reward for congruent performance.
It is also noted that culture opposes change and will resist any idea that changes the way of approaching situations and behaviour.
It was concluded that NPD is an indicator of future success; as organisations have to keep the ever changing customers' needs fulfilled in order to remain successful and profitable. However it is noted that NPD is one of the most risky and costly aspects of any marketing effort, thus a systematic approach is generally adopted. This involves gathering as many data as possible as few are those which ever become products. This data is deeply examined and passes from different stages with the aim of eliminating the impractical ones. Development, deeper analyses and testing will take place before the much awaited product launch.
It was also concluded that numerous are the benefits an organisation may avail itself to from successful NPD.