Earlier briefings [starting at no.24] explained how resources carry attributes with them when won by, or lost from an organization. Resources also carry attributes with them as they develop from stage to stage.
A common case concerns staff experience, which for simplicity can be measured in years. The figure below shows a three-level staff structure, with junior staff being hired with no experience. Thereafter, three distinct mechanisms raise or lower experience:
- Junior staff add one year of experience for each year they remain in that grade,
- Each junior person lost reduces the total experience of the group by taking with them the number of years’ experience they have.
- Each junior person promoted also reduces the total experience of the group by taking with them the number of years’ experience they have, but this is added to the experience of the middle management group.
Note, as explained previously, that the stock of total juniors’ experience is expressed in person – years, so the average person’s experience is given by dividing this total by the actual number of juniors. This is not shown to avoid over – complicating the figure.
Figure 1: Staff carry experience with them as they develop within an organization.
The same three mechanisms operate on the middle management group, with the addition of an inflow to experience brought by the newly promoted juniors (causal links not shown for clarity). The same mechanisms apply once again for senior executives, except that there is no onward promotion. The quantitative implications that arise when resources develop and carry their attributes with them can be readily computed, provided that the procedures for dealing with resource attributes are properly combined with those for resource development. This kind of analysis is useful in a variety of situations.
- An organization facing the imminent retirement of a large fraction of its experienced senior management can anticipate the likely impact of accelerated promotion from its middle grade to fill the senior vacancies. The resulting reduction in experience amongst senior management is just one important consequence. Others include the unavoidable loss of experience amongst middle managers, reduced losses from that level as middle managers see promotion prospects improving, and concern about adequate experience amongst juniors who will be needed to replace the promoted middle managers.
- Many businesses, banks for example, have different ways of managing the relationship with a particular customer, depending on the scale of that customer. If customers move between those categories – e.g. a small business customers get larger, or large ones decline – it is necessary to change the way they are dealt with, which means that staffing and other resource plans may need to change. Failure to deal with this dynamic can leave the firm with many low-value customers who still impose costly service costs, or high-value customers who are under-served.
Attributes are carried forward by other types of resource as they develop through the system. Products, for example, are often developed because it is believed they could appeal to an estimated number of potential customers. Management must take this attribute into account when prioritizing the product development pipeline. When faced with limited R&D resources, for example, should priority focus on products with a large potential market, but limited probability of success, or on a larger number of products, each with a smaller potential market but higher likelihood of success?
Until next time…
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Adding already – developed resources
If there is too little resource in early stages of a pipeline to feed the developed resource an organization needs, a common solution is to bring in already – developed resource from outside. Drugs companies, for example, often buy or licence part – developed drugs from competitors, or even acquire whole companies in order to access a promising pipeline of drugs in development.
Companies frequently hire middle or senior managers if they find they lack the internal staff to fill the positions that are needed. This quick fix needs to be used with care, however. The quality of external hires is not readily known. Sheer years of experience is not a reliable guarantee of true capability — hence the considerable demand for the services of head-hunters who claim to ensure that quality. Bringing in new senior staff can also disrupt the other flows. Middle managers may feel devalued, leading to faster loss of both people and experience from that level.
This briefing summarises material from chapter 6 of Strategic Management Dynamics, pages 341-344.
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