Management Principle of Nike - Essay Example

This essay will help us understand how a strategic objective could be attained through change in collective and individual behaviour of the employeesof Nike. We will discuss and analyze two cases involving Nike. In the first, we will know how the company should design its travel policy based on the existing policy and the feedback coming from the senior managers. The second one will discuss the pay and reward system of Nike to determine whether there is basis to adapt Nike’s approaches as prescribed in the case facts? In both cases, the approach is to answer the guide questions that were made part of part of case facts. Part I-Business class Travel Question No. 1 Comment on the statements relating to “spend the company’s money as if it were your own”, and “we want people to understand the thinking that lies behind it”. What are the strengths and shortcomings of these approaches to ensuring, maintaining and developing collective identity, uniformity, and fairness; and collective and individual attitudes and behaviour? Comments As to the first statement, it is really a good business policy to have such policy statement because it attributes responsibility of travel decisions to the officers of the corporation. By saying so, it would seem to treat the senior managers or employees as co-owners of the business in a sense and it is in that sense that they will be expected to behave as that of an owner or stockholders. But said philosophy must be translated into some thing more concrete because people could have different interpretation as to how to treat something as his or her own. It will become a question of personal values. The discussion of the managers as recorded in the facts of the case is very much fruitful as how to devise a policy whether to use economy class, business class or first class in the aircraft. While officers want business class to have for travels with period exceeding five hours, there is valid objection as to the purpose of the travel whether to make a general contact or to sign a substantial deal. It is worth noting as well if the travel is for business or for pleasure but for our purpose we will treat travel for pleasure as part of the personal expense of the manager and therefore not factor for Nike management in designing a travel policy. At this point, it would seem it is logical to argue that travel that is more important should be given more weight that could justify the use of business over economy class. A balance should be made between the two like the one that is found below:       Travel time not Travel time Purpose     exceeding 5 hours -30% exceeding 5 hours -70% General contact - 30%   Economy class Business class To sign substantial deal –70% Business class Business or First Class  where these come from? Please tell me It came from my own analysis in trying to determine which type of travel ticket is applicable for a given business activity. The values are assigned by me. Management involves measurement and under management accounting values could be assigned to facilitate analysis for decision making. Interpreting the matrix above it is clear that if the purpose is just to have general contract and the travel is less than 5 hours, the recommended type of travel is for economy class but if the purpose is to sign substantial deal say a certain amount of million contract, then business class is recommended. It would seem also that as long as the purpose is the signing of contract for substantial million of dollars, the manager concerned must attend to it. Opportunities should not be lost because of failure to travel. Strengths and shortcomings of these approaches The strengths of the approaches include binding the organization into one culture or one way of behaving in response to policies but may be weakness of they will end up “lip-service” in case of lack of seriousness to follow said policies of failure to implement the same through written rules. Question No.2. What are the strengths and shortcomings of “finding out what other companies did in this are?” Identify the full range of possible and potential effects on collective cohesion, and collective and individual commitment, as the result of finding out what other companies do in this area. Strengths and weaknesses of comparing In finding out what other companies did, Nike is just comparing with other corporations. The strengths of such strategy includes allowing Nike to investigate the uniqueness of the other corporation, which must be model or successful corporation to begin with, and try to learn its business strategy on how it used the travel policy to increase performance. This must be so because any policy of a company must be aligned with its strategic vision and such strategic vision normally includes a reasonable control on its travel cost under a well-studied cost-benefit analysis. Using the said cost analysis, a wise corporation would have to define the requirements where travel could be allowed. In other words, where travel will really affect the growth and development of the Nike, then by all means, travels must not be denied. The weakness lies in having a negative attitude. If for example, the comparison is made with out really comparing the unique distinction of the company with which Nike would be compared. If for example, a certain competitor in the industry would allow all the mangers to travel first class, it would be wrong for Nike to base immediately its decision based on said information. This is because there are no two corporations alike. The other corporation’s travel policy may no have the same basis as that of Nike. Possible effects As to possible and potential effects on collective cohesion, and collective and individual commitment, of the result of finding out what other companies do in this area is a question of attitude of the part of Nike management. If he were motivated by proper attitude, most probably the result would be positive but if it negative, the result will also be negative. Some managers may get de-motivated for knowing competitor’s policy, which Nike may not afford to give. Question No. 3. Discuss the factors that should be taken into account in developing a new policy for business travel and entertainment. Factors to be considered The factors to be considered must include the following: length of time of travel time, the purpose f the travel, availability of budget and approval by key officers and the board of directors. We will present our analysis here based on what are clear in the case facts. One part of the dialogue there is the issue on travel time. There is a proposal that travel time exceeding five hours should be business class. There must have been a good reason for suggesting the same. For some travelling may not be too enjoyable in the first place. Some travellers just need to have a better accommodation if the travel is long. The purpose of the travel is important because it is tied with the business of the Nike. Every purpose must be business related and are revenue generating has the potential generate the same. Part II. Phillip Nights on Pay and Rewards Question No. 1. Identify the effect on perceptions, attitude, behaviour and performance that pay and reward policies ought to have. Effect of policies on perceptions, attitudes, and performance The message of performance-based program of Nike clearly supports only the performers. For those who believe can perform, will have no problem. On the other hand, it would seem to erase loyalties of employees to Nike because they are being “pressured” to produce and to grow every rating period. Performance-based program may have its advantages but it may also have its disadvantages. It creates pressure on employees to know where they should stand. While some aggressive type employees and self-motivated ones may welcome the pay and reward system of Nike, others may have a negative attitude. The latter may believe that the company does accept them as workers as producers and they are well thought of as long as they are productive but if they could no longer produce. It will not be surprising for an employee to hear from Nike the following statement: “You are too old to work, please resign if you cannot deliver. The intention of management may have been very good since it will reward those who can produce more, but for some their commitment level may be seriously put in question. People want to be accepted for whom they are and not just, what they can do. Wrong perceptions that may be created by the pay and reward system create wrong attitudes and wrong attitudes create wrong performance. On the other hand positive perception results to positive attitudes and the latter produces correct performance. Question No. 2. Identify the effects on perceptions, attitudes, behaviours and performance that the above approach is likely to have. Effect of approaches on perceptions, attitudes, and performance To discuss on effects perceptions, would mean asking how would the employees react about the approaches being adopted by the company in its pay and reward system? We define approaches as referring to the methods and manners of affecting the policy on pay and reward system. The challenging question is whether the performance-based program promotes the interest of management, stockholders and employees alike. Since it is an executive action and a management prerogative, it must have the support of the employees including the managers. It the answer to the above observation is negative, and then a negative reaction is expected from the perceptions, attitude and performance of employees. In the first place, management is doing that to promote productivity of the organization in terms of higher revenues or lower cost. Any organization has different functional areas, which include production or operation, marketing, finance, human resource and accounting or management information. To have a performance level requires measurement which is the most difficult to do. For marketing people this is easy because, out puts could be measure in term of sales revenues, whether per individual sales or per department’s sales but not all functional departments or areas are revenues based. Hence, many may be cost based. One best example is operation. Will the performance level be measured in terms of the minimized costs? The problem in cost is that there is a limit to its going down unlike sales, which could go up. For example if the current cost to revenue ratio, is 45%, making it lower to 44% or to 43% may not be that easy because cost minimization has a limit, more over, cost is also a function of economic factors like inflation and interest rates. I am an accountant. I need not have reference to validate this truism. My common sense confirms to me that this is true because it is impossible to have sold a product to have no cost. In higher learning they call this theoretical convenience. Yes, we may say that these are external factors and that they may be easily identified and factored in the formula to be used for measuring performance, the more difficult problem is how to explain this to employees that will be affected. The case facts acknowledged that the employees must perceive the program as fair. Perception then requires a communication of the program to employees and how the program will be administered, particularly on how they will be measured. How about its effect on performance? Will the purpose of management to effect change through the above approaches attain the desired increase level of performance. Is there logic to the approaches to solve the problem? These questions could only be answered if there positive perception of the employees. Hence to answer the question, the there must be correlation if the strategy was too much or it is just ok. There is no known fact about Nike in the case facts except the case involving the travel policy where the policy is considered broad statement. Assuming that is the case the managers of employers are reacting at present, there seems to be no case policy on cost minimization and therefore performance would seem to be not a priority. Performance is not just a function of revenue maximization; it is also cost minimization. If the policy on travel is considered and is not clear, the policy on pay and reward system may get affected. It must be consistent with the travel policy especially when travel is a big amount far as the business of Nile is concerned. Although there is no financial information to base the decision, there is enough reason to make policies consistent expenses in travel could be high. Management may not be lax with business travel policy and yet strict on the performance as far the rank and file are concerned. A policy that has no internal consistency is a weak policy. To diagnose the possible effect on perception, attitude and performance let us try to analyze the objectives in relation to approaches. Part of the pay and reward objectives at Nike, include the following; Employees should be able to perceive the system as being fair. The system should be easy to administer. The system should allow for delegation of individual salary decisions to the appropriate managerial level The listing above this came your case facts. I was asking you to give me the author, title of book , publisher and date of publication for me to include this in the references but you seem to have forgotten. Pls check my previous messages. . The salary system should work in concert with other forms of pay and rewards, additional and flexible benefits, and commissions and bonuses presently established at Nike”. The other pay objectives of Nike may seem to be okay it is harder to draw the implementing guidelines particularly on measurement of accomplishments especially on cost-based departments like operation. Hence, the above objectives as extracted from case facts may not be attained. The other two above are part of analsyis. They need not be referenced. As stated earlier if the travel, policy is not in place, the pay and reward system may not work well. This is because an ordinary rank and file will say, “ I keep on minimizing cost, only to find out my manager travels first class with out let us. Why support performance program of Nike?” From this basic perception could come the sense of unfairness and such thinking could permit the whole organization and the pay and reward system may not attain its objective of increased performance in terms of higher profits. So, let us make a little summary before we proceed with further analysis, that is, that positive perception will of course depend on the positive attitudes of management and the employees. If management perceives of the program that it will not accomplish much, they will have little support for it and if they don’t support they program would most likely be perceive as a way of terminating people especially the old ones and replace them with the new. If that is the perception of the employees, the program is doomed to fail because it is not explained well. As we have seen, the more difficult part is the measurement of performance. The case facts classify performance as follows: “0% below minimal job expectations, 5% at the job expectations, 6-9% above expectations.” What is the meaning of expectations? How are tardiness and absences factored in? Does this mean that employees could be come to office late as long as they will deliver the output that they are required to do? How are often are performance measured? Is it yearly, monthly or semi-annually.? Robert I. Lazer1 (pp. 69-73) gave us the following causes of failures of performance evaluation programs: multiple uses of the program, lack of top-management support, lack of job relatedness, raters bias, and too many evaluation forms to complete on each individual. On the other hand, Chruden and Sherman gave us the following reasons of failure: Two forces (that is evaluation program and motivation program) may be in conflict. The evaluation interview essentially becomes a salary discussion, in which the superior seeks to justification. Consequently, the discussion little influenced upon future job performance. Managers perceive that little or no benefit will be derived from the time and energy spending the process. Managers dislike the face-to face confrontation. Most managers are not sufficiently skilled in conducting, evaluation interviews. The judgmental process required for evaluation is in conflict with helping roles of developing employees2. (Chruden and Sherman, page 237) Question No.3 3. On the basis of you answer to question one, produce recommendations that will address the shortcomings that you have identified and say how and why these recommendations will address the issues that you have indicted. Recommendations to address the shortcomings The following are my recommendations to address the shortcomings of the system. 1. The managers must be trained to understand what they are doing. Management must give its support to the system, hence must be made to know how to measure performance and how fairness is served. This will necessitate sending of the different managers to training programs take their training for them to understand program particularly the theory behind and it’s proper administration. Thus must be so because an employee in an accounting department who will meet an employee in the marketing department will share stories on how each is evaluated. If one of the employees will complain to his supervisor or to his manager, the latter must be knowledgeable to explain the different performance system among different departments. Failure to do could be source of lack of understanding of how the systems works and employees may lose trust in the system. 2. Top management must put managers who are ready and willing to be evaluated on the bases of performance criteria that will be using to their subordinates. 3. Managers in position must be men of communication and will not dislike face-to-face confrontation since he must realize that performance is the standard the company adapts o that he has reason to implement the same. 4. Performance appraisal must be conducted in a friendly and professional manner so that evaluation ion will not become discussion on salaries. 5. There must be a clear link of company objective and the criteria in evaluating performance and must be clearly established in order to prevent possible conflict. 6. Employees must be part of the design process of pay and reward system for them to support the program. This is especially true if the corporation is unionized. 7. Decision of managers must be subject to appeal to top management so that subjectivity is minimized and if unresolved it must pass through the proper grievance procedure. 8. Finally, management must carefully count the cost of the program so that Nike will not be in a worse situation before the program. This must be so since evaluation of performance could mean lack of loyalties for employees because, they are not valued for what they are but what they can do. In this case, a higher turn over of employees could be worse because there is cost for hiring and training and firing of people. In other words, there should be a proper cost benefit analysis before any pay or reward system could be implemented. Recommendations need not be referenced because they are conclusions as a result of analysis. This is the essence of this paper. The strong relationship of the analysis and the recommendation. If a copied this through referencing, then I am not analysing, but may be summarizing another book. Conclusion We have seen a little part of business realities. Many people say that business is for the strong willed. It is for those with heart for challenges and with a mind for details. A travel policy may just be a simple work of telling what is allowed and what is not allowed and a pay and reward system may just be telling people, “You better produce or you’ll be fired. Yes, they seem to be simple but they could not be too simple when you deal with humans. Human have different personalities. In fact, the Divine Creator must have intended beauty in making everybody unique. Thus scientifically speaking the probability that one’s DNA might be the same with someone else is one in a billion. Get that reality in business and you will find that strategies for travel, pay and reward system may have the same objectives of having a better profit for Nike, but you should realize, people react different to different situations. The above are made to dramatize the beauty of this essay. I need not quote any one because they are my own. Writing is an art, hence there is creativity which makes its admirable and good to the taste. More over this is also part of the conclusion, hence I believe, referencing need not come too frequently. Hence, the designs must understand human nature; in this case, the perceptions, attitudes and behaviour of their employees as far as company-designed programs are concerned. Nike must involve them if possible. For managers, they are supposed to know more than the ordinary employees do and they must take the brunt for knowing and applying the necessary management principle in Nike. Managers are said to be leaders and leaders are good followers first. Managers must follow policies but before it could so, they must make those policies in travel, pay and reward systems clear by communicating through proper channels in the most effective and professional manner. With all due respect, references are easy to make but too much references may not necessarily make the paper good. In fact it may remove the originality. Thanks. Read More