Lecture Sheet-8

(Session 14, 15 & 16)

E2: Enterprise Management

Scope of session
Chapter 8 – Relationships in the Working Environment
• Group & teams: types, benefits, problems, group cohesiveness, factors of group cohesiveness,
team development, team performance
• Conflict & its management: conflict, how conflict arises, causes of conflict, types & sources of
conflict, Constructive & Destructive Conflicts, managing conflict
• Communications: what is communication, purposes of communication, process of
communication, barriers to effective communication
• Meetings: roles of team members in meeting, problems & solutions with meetings
• Negotiation: what is negotiation, bargaining strategies, negotiation process/stages, guidance for
successful negotiation
• Mentoring: what is mentoring, what does a mentor do, benefits of mentoring
• Managing finance functions: Business Process Outsourcing (BPO), Shares Service Center
(SSC)

Chapter 8: Relationships in the Working Environment

Group & Teams

❑ Group: Group is a collection of two or more people with shared common objectives. It is a
collection of two or more individuals, interacting and interdependent, who have come together to
achieve particular objectives. Schein (1988) suggests that a group is any number of people who:
• interact with one another;
• are psychologically aware of one another; and
• Perceive themselves to be a group.
❑ Types of group:
(1) Informal Group: A group that is neither formally structured nor organizationally determined;
such a group appears in response to the need for social contact, security & safety need.
Examples- Basketball team, cultural group.

(2) Formal Group: Formal groups are created by management to fulfil the specific goals and
tasks related to the needs of the organization. Organization use formal groups to carry out
tasks, communicate and solve problems. Examples- Department, divisions, task force, project
group, quality circles, committees, and board of directors.
Difference between Formal and Informal Group: -
Basis Formal Group Informal Group
Formation Legally constituted, rationally Emerges naturally and spontaneously
designed, and consciously planned
Existence Naturally formal group does not arise Informal group emerges while
because of informal group working in a formal group
Purpose Well-defined and centers around Ill-defined and centers around
survival, growth, profit, service to friendship, goodwill, unity and so on.
society
Relationship Superior-subordinate relationship Personal and social relationship
Influence by Rationality and leaves no scope for Influenced by personal, social and
personal, social and emotional emotional factors

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factors
Communication Unity of command and line of Pattern is grapevine, which is natural,
authority followed haphazard and intricate
Leadership Based on formal authority and Based on individual competence and
position group acceptance
Boundaries Operates within set boundaries No bounds, operates in different
directions

(3) Reference Group: It is a group to which a person does not currently belong to but is compared
and wants to join. Reference groups are used in order to examine and determine the nature of a
person or other group's features and sociological attributes. It is the group to which a person
relates or aspires to link himself or herself psychologically.
(4) Self-directed & autonomous group: Autonomous groups are the groups of self-directed, self-
managed and self-motivated employees who work for interrelated and interdependent works.
This autonomy includes independent decision-making related to a specific work function,
project or job and independent freedom to assign individual members specific tasks within the
group.

❑ Team: A team is a formal group. It has a leader and a distinctive culture and is geared towards a
final result. A team is a small number of people with complementary skills who are committed to a
common purpose, performance goals, and approach for which they hold themselves mutually
accountable (The Wisdom of Teams).
Difference between Group and Team: -

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❑ Benefits of Team/group: There are a number of benefits from team working-

(1) Increased productivity

(2) Synergy
(3) Improved focus and responsibility
(4) Improved problem solving
(5) Greater creativity
(6) Increased satisfaction
(7) Increased motivation
(8) Improved information flows

❑ Problems with groups/teams: Unfortunately, groups can also have negative as well as positive
effects. Subsequent research has identified a number of these negative effects, some of which are
discussed below.

(1) Conformity
(2) The Abilene paradox
(3) Groupthink
(4) Group Shift or Group Polarization or risky shift

❑ Group Cohesiveness: Cohesiveness is the degree to which members are attracted to each other
and motivated to stay in the group. There are a number of factors which affect the integration of
organizational and individual objectives in groups, and hence the cohesiveness of the group. They
include:
Membership factors
• Homogeneity.
• Alternatives
• Size of group.
• Membership in other groups
Environmental factors
• Task
• Isolation of the group
• The climate of management and leadership
Dynamic factors
• Groups are continually changing, not just in membership but also in understanding each other
and of the task.
• Success and failure, there is a tendency to persist in failure.

❑ Team Development: The Five-Stage Model

Groups generally pass through a predictable sequence in their evolution. Although not all groups
follow this five-stage model, it is a useful framework for understanding group development. The
five-stage group-development model characterizes groups as proceeding through the distinct stages
of forming, storming, norming, performing, and adjourning.

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1. Forming: The first stage, forming stage, is characterized by a great deal of uncertainty about
the group’s purpose, structure, and leadership. Team members may experience stress due to the
uncertainty of not knowing the other team members and understanding their role on the team.
Members “test the waters” to determine what types of behaviors are acceptable. The team
leader should clarify the team purpose and set up ground rules through a team charter. This
stage is complete when members have begun to think of themselves as part of a group.
2. Storming: As the team interacts on project work, conflicts emerge regarding the goals and
contributions of team members, and the group enters the storming stage. Members accept the
existence of the group but resist the constraints it imposes on individuality. There is conflict
over who will control the group. The team leader should openly address conflict and maintain a
focus on the team purpose and ground rules established in the charter. At the end of this stage,
the leadership question is typically resolved, and it is clear who will lead the group. Also, a
status hierarchy, or pecking order, may be established.
3. Norming: In this stage, the members of the team form a cohesive unit and close relationships
among team members develop. The group establishes further “unwritten rules,” or norms, for
what is acceptable behavior. During the norming phase, the leader should remind the followers
of the ground rules and address deviations constructively. Once norms are established, the
team should be performing by producing collective work products.
4. Performing: The fourth stage is performing. The structure at this point is fully functional and
accepted. Group energy has moved from getting to know and understand each other to
performing the task at hand. In this phase, the team leaders should celebrate success along the
way to achieving the team goal.
5. Dorming/Adjourning stage: For permanent work groups, performing is the last stage in
development. However, for temporary committees, teams, task forces, and similar groups that
have a limited task to perform, the adjourning stage is for wrapping up activities rather than
task performance and preparing to disband.

❑ Team Performance
In a group, there is a high level of mutual interaction and awareness which are responsible for
powerful forces. It is important to the organization that these forces work for the organization and
not against it.

There are number of models/theories which suggest different factors affecting group dynamics and
team performance:

1. Belbin- Team roles

Dr Meredith Belbin suggests that the success of a group can depend significantly upon the
balance of individual skills and personality types within the group. A well-balanced group
should contain the following nine main character types:
1. Plant
2. Monitor evaluator
3. Specialist
4. Shaper
5. Implementer (company worker)
6. Complete finisher
7. Coordinator (leader)

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8. Team worker
9. Resource-investigator

2. Role theory

Role theory is concerned with the roles that individuals adopt. Developing a group means
identifying distinct roles for each of its members. Any individual can have several roles,
varying between different groups and activities. The role adopted will affect the individual’s
attitude towards other people.
There are several terms associate with role theory.
1. Role ambiguity
2. Role conflict
3. Role incompatibility
4. Role sign
5. Role set
6. Role behavior

3. Steiner- How group dynamics can affect performance

A. Additive model - every individual contributes but no one is dependent on anyone else. The
total output in theory depends on the average skill or ability, but in practice it is found to
fall short. This loss of efficiency increases with the size of the group and may be either
motivational or intersectional.
B. Conjunctive (coordination) model- high degree of dependency required (assembly line).
The model suggests that performance will now be affected by the weakest member. The
smaller and more homogeneous the team, the more efficient the team performance.
C. Disjunctive (collaboration) model- applies to things like problem-solving, where the
group performance should be close to that of the most competent member, that is better
than that of the average member. Group size should therefore be as small as possible,
consistent with having all the necessary range of skills available, in order to reduce
interaction losses. Groups should be heterogeneous to provide these skills and to reduce
any tendency towards unproductive group norms. A well-established or homogeneous
group may tend to work towards agreement rather than towards an optimum solution.
D. Complementary model -applies where the task can be divided into separate parts and
different skills are needed for each.

4. Vaill- high performance teams

According to Vaill (1989), high-performance teams exhibit the following characteristics:

• They perform excellently against a known external standard, and what they did before.
• They perform beyond what is assumed to be their potential best.
• They are judged by informed observers to be substantially better than comparable
groups.
• They achieve results with fewer resources than are assumed necessary.
• They are seen to be exemplars, achieving the ideals of the culture.

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Conflict and Its Management
❑ Conflict: Conflict is a process resulting in the perceptions of two parties that they are working in
opposition to each other in ways that produce feelings of discomfort and/or animosity. Conflict is
defined as “the process that begins when one party perceives that the other has negatively
affected, or is about to negatively affect, something that he or she cares about”.

❑ How conflict arises? Conflict situations arise because of fear, force, fair or funds. Fear is an
imaginary concern for future. Force of any kind initiates and concludes conflicts. Fair is the sense
of fairness, which determines the moral values of an individual. Tangible as well as intangible
costs may provoke conflict, and also help towards its resolution.

Interpersonal conflicts arise because of differences in personality, perceptions, status and

ideological and philosophical outlooks.

Other causes of conflict can be communication gaps; personality differences; substandard

performance; disputes over approaches, responsibility and authority; lack of cooperation; or
competition for limited resources.

❑ Causes of Conflict:
1. History
2. Scarce resources
3. Interdependence
4. Communication barriers
5. Organizational differentiation
6. Ambiguous jurisdictions
7. Reward systems
8. Cohesive groups
9. Personality Clashes
10. Stress and failure
11. Change

❑ Types & Sources of conflicts:

Horizontal Conflict: Horizontal conflict occurs between groups or departments at the same level
in the hierarchy, such as between line and staff. For example, production may have a dispute with
quality control because new quality procedures reduce production efficiency. The sales
department may disagree with finance about credit policies that makes it difficult to win new
customers. R&D and sales may fight over the design for a new product.

There are a number of factors that may play a part in creating conflict:
1. Environment
2. Size
3. Technology
4. Goals
5. Structure
6. Operative goal incompatibility
7. Task interdependence
8. Uncertainty

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9. Reward system
10. Differentiation

Vertical Conflict: Vertical conflict occurs among groups at different levels in the vertical
hierarchy and can take various forms. Individual employees may have conflicts with their bosses.
Managers of international divisions often experience conflict with senior executives located at
domestic headquarters. It is usually about power and powerlessness, as the vertical levels have
progressively more power to allocate scarce resources. Some examples are:
• Power & status: at the bottom of the hierarchy workers often feel alienated.
• Ideology: different values, e.g. free enterprise versus the right to industrial action.
• Psychological distance: workers feel isolated from the organization
• Scarce resources: financial resources affecting remuneration and working conditions and
costs.

❑ Constructive (Functional/positive) and Destructive (Dysfunctional/Negative) Conflicts

Functional Conflict: Positive conflict is functional and supports or benefits the organization or
person’s main objectives. Conflict is constructive when it leads to better decisions, creativity, and
innovative solutions to long-standing problems.

Dysfunctional Conflict: Negative conflict is dysfunctional and hinders the organizations or the
person’s performance or ability to attain goals or objectives. Conflict is destructive when it leads to
stress and anxiety, inability to take action, and loss of esteem or purpose.

❑ Managing conflicts/ Conflict-handling strategies

Conflict management: Conflict management focuses on maintaining conflict at functional levels

for a department, work unit, or entire organization. Conflict management does not mean the
elimination of conflict, nor does it refer only to conflict reduction. It means maintaining conflict at
the right level to help the department, work unit, or organization reach its goals.

Conflict-handling strategies: A useful framework for classifying different ways of handling

conflict has been produced by Thomas (1976). It is based on two conflict-management dimensions.

➢ Cooperativeness –the degree to

which one party attempts to satisfy
the other party’s concerns and
➢ Assertiveness – the degree to which
one party attempts to satisfy his or
her own concerns
Using these two dimensions, we can
identify five conflict-handling
strategies:
• Competing–assertive and uncooperative
• Collaborating–assertive & cooperative

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• Avoiding – unassertive and uncooperative
• Accommodating – unassertive and cooperative and
• Compromising – midrange on both assertiveness and cooperativeness

1. Competing: Competition occurs when the goals are incompatible, and the interactions are
important to each party’s meeting its goals. If all parties are striving for a goal but only one can
reach the goal, the par-ties will be in competition.
▪ High assertiveness and low co-cooperativeness – the goal is to ‘win’
▪ All or both parties seek to maximize their own interest and goals.
▪ They do not cooperate, creating winners and losers as well as causing damage to the
organizations.
▪ Not recommended
2. Collaborating: When parties in conflict each desire to fully satisfy the concerns of all parties,
there is cooperation and a search for a mutually beneficial out-come. In collaborating, the
parties intend to solve a problem by clarifying differences rather than by accommodating
various points of view.
▪ High assertiveness and high co-cooperativeness – the goal is to ‘find a win-win
solution’
▪ A win-win solution is achieved through joint confrontation of the problem and using
problem-solving techniques with creative solutions.
3. Avoiding: A person may recognize a conflict exists and want to withdraw from or suppress it.
Examples of avoiding include trying to ignore a conflict and avoiding others with whom you
disagree.
▪ Low assertiveness and low co-cooperativeness – the goal is to ‘delay’
▪ One or more parties in conflict seeks to avoid, to suppress or to ignore the conflict.
▪ Not recommended as it does not resolve the conflict which may break out again when
the parties meet in the future.
4. Accommodating: Accommodating is the willingness of one party in a conflict to place the
opponent’s interests above his or her own.
▪ Low assertiveness and high co-cooperativeness – the goal is to ‘yield’
▪ One party puts the other party’s interest first.

5. Compromising: In compromising, there is no clear winner or loser. Rather, there is a

willingness to ration the object of the conflict and accept a solution that provides incomplete
satisfaction of both parties’ concerns.
▪ Moderate assertiveness and moderate co-cooperativeness – the goal is to ‘find a
middle ground’
▪ Negotiation results in each party giving up something and ‘meeting half way’
▪ The problem is each party may lose something when there may be a better alternative.

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❑ Conflict management techniques: Managers must know when to stimulate conflict and when to
resolve it if they are to avoid its potentially disruptive effects. As we noted earlier, too little
conflict and too much conflict
are each dysfunctional in their
own ways. Hence, if there is
too little conflict, managers
many need to stimulate a
moderate degree of conflict. If
conflict is excessive, however,
it may need to be reduced.

Stimulating Conflict
A complete absence of conflict
may indicate that the
organization is stagnant and
that employees are content
with the status quo. It may also suggest that work groups are not motivated to challenge traditional
and well-accepted ideas. Conflict stimulation is the creation and constructive use of conflict by a
manager. Its purpose is to bring about situations in which differences of opinion are exposed for
examination by all.

Conflict Resolution
When a potentially harmful conflict situation exists, however, a manager needs to engage in
conflict resolution. Conflict needs to be resolved when it causes major disruptions in the
organization and absorbs time and effort that could be used more productively. Conflict should
also be resolved when its focus is on the group’s internal goals rather than on organizational goals.

❑ Intergroup conflicts: Intergroup conflict within organizations can be defined as the behavior that
occurs between organizational groups when participants identify with one group and perceive that
other groups may block their groups’ goal achievement. It requires three ingredients:
I. Group identification: employees have to perceive themselves as part of an identifiable
group or department.
II. There has to be an observable group difference of some form. The ability to identify
oneself as a part of one group and to observe differences in comparison with other groups
is necessary for conflict.
III. Frustration: Frustration means that if one group achieves its goal the other will not; it will
be blocked. Frustration need not be severe and only needs to be anticipated to set off
intergroup conflict. Intergroup conflict will appear when one group tries to advance its
position in relation to other groups.

❑ Management of intergroup conflicts:

❖ Confrontation: Confrontation occurs when parties in conflict directly engage one another and
try to work out their differences. Negotiation is the bargaining process that often occurs during
confrontation and that enables the parties to systematically reach a solution. Confrontation and
negotiation involve some risk. There is no guarantee that discussions will focus on a conflict or
that emotions will not get out of hand. Confrontation is successful when managers engage in a

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‘win-win’ strategy. Win-win means that both departments adopt a positive attitude and strive
to resolve the conflict in a way that will benefit each other.

❖ Third-party consultants: when conflict is intense and enduring, and department members are
suspicious and uncooperative, a third-party consultant can be brought in from out-side the
organization to meet with representatives from both departments. Third-party consultants can
make great progress toward building cooperative attitudes and reducing conflict.

❖ Member rotation: It means that individuals from one department can be asked to work in
another department on a temporary or permanent basis. The advantage is that individuals
become submerged in the values, attitudes, problems and goals of the other department. In
addition, individuals can explain the problems and goals of their original departments to their
new colleagues. This enables a frank, accurate exchange of views and information. Rotation
works slowly to reduce conflict but is very effective for changing the under-lying attitudes and
perceptions that promote conflict.

❖ Superordinate goals: Another strategy is for top management to establish superordinate goals
that require cooperation between departments. Conflicting departments then share the same
goal and must depend upon one another to achieve it. To be effective, a superordinate goal
must be significant and must consume a substantial amount of each group’s time and energy.
The reward system also can be redesigned to encourage the pursuit of the superordinate goal
rather than departmental sub goals.

❖ Intergroup training: A strong intervention to reduce conflict is intergroup training. This

technique has been developed by psychologists such as Robert Blake, Jane Mouton and
Richard Walton. When other techniques fail to reduce conflict to an appropriate level, or when
other techniques do not fi t the organization in question, special training of group members
may be required. This training requires that department members attend an outside workshop
away from day-to-day work problems. The training workshop may last several days, and
various activities take place. This technique is expensive, but it has the potential for developing
a company-wide cooperative attitude.

❑ Dealing with industrial relations conflict

Although vertical conflict can take place without the presence of unions, Trade unions highlight
vertical conflict as they try to equalize power differences between workers and management where
the ground rules for conflict are formalized by laws and regulations. The sources of vertical
conflict reflect the reasons why workers join unions.

The first priority for representatives is loyalty to their group. These can create strategies for
avoidance or individualistic approaches:

 Union avoidance strategies including ‘double-breasting’ (setting up new plants in areas of

high unemployment, or low union activity), developing collective bargaining to factory level,
removing unions from annual pay rounds whilst giving the right of the union members to be
consulted and represented.

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 Individualistic approaches away from third party involvement using appraisal systems,
training and development schemes, performance –related pay systems, share schemes and the
same pension and health schemes for all.
 Collective bargaining using procedural methods (a prescribed format) ultimately leading to the
substantive agreement (defining each party’s rewards and responsibilities for the next two to
three years) in collective negotiation between workers and management.
Communication
❑ Communication: Communication is the transfer and understanding of meaning (Stephen P.
Robbins & Timothy A. Judge). Communication is the social process in which two or more parties
exchange information and share meaning (Griffin & Moorhead).

❑ Three Purposes of Organizational Communication: Achieving coordinated action is the prime

purpose of communication in organizations. Sharing information properly and expressing
emotions help achieve coordinated action.

❑ The communication process: The communication process can be defined as a process that is
used to impart a message or information from a sender to a receiver by using a medium of
communication.

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Source: The source is the individual, group, or organization interested in communicating
some-thing to another party. The source is responsible for preparing the message, encoding it,
and entering it into the transmission medium.
Encoding: Encoding is the process by which the message is translated from an idea or thought
into symbols that can be transmitted. The symbols may be words, numbers, pictures, sounds, or
physical gestures and movements.
Transmission: Transmission is the process through which the symbols that carry the message
are sent to the receiver. The medium is the channel, or path through which the message is
transmitted.
Decoding: Decoding is the process by which the receiver of the message interprets its
meaning. The receiver uses knowledge and experience to interpret the symbols of the message.
Receiver: The receiver is the individual, group, or organization that perceives the encoded
symbols; the receiver may or may not decode them to try to understand the intended message.
Feedback: Feedback is the process in which the receiver returns a message to the sender that
indicates receipt of the message. Feedback verifies the message by telling the source whether
the receiver received and understood the message.
Noise: Noise is any disturbance in the communication process that interferes with or distorts
communication. Noise can be introduced at virtually any point in the communication process.
The principal type, called channel noise, is associated with the medium.

❑ Barriers to effective communication & ways to overcome barriers:

Party Barriers to Communication Ways to overcome barriers
Sender • Not being clear as to what has to be • Have a definite, clear objective
communicated. • Plan the communication
• Omitting information • Ensure that all elements of the
• Choosing words in coding the communication fit
messages that do not accurately reflect • Think about the receiver and their
the idea/concept, and/or choosing situation
words that the intended receipt cannot • Anticipate reactions to the message
understand and cater for these
• Choosing words that provoke an • Practice
emotional response • Seek and work with the feedback
• Using technical jargon
• Choosing an inappropriate medium
• Sending too much information
• Sending mixed messages
Receiver • Not in an appropriate state to receive • Consider their contribution
the message • Listen attentively
• Not wishing to receive the message • Check out anything that is vague
• Filtering out elements that he or she • Give feedback
does not wish to deal with
• Information overload
• Mindset that does not admit the
substance of the message
Noise may also interfere with Non-verbal communication
communication: During face to face communication, the
• Physically impairing the receiver’s following non-verbal actions can help to
ability to receive or the sender’s ensure the message is communicated

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capacity to receive feedback correctly:
• Physical failure of the medium of • Maintain eye contact
transmission • Smile
• Limiting the encoding/decoding • Occasionally nod
capabilities of the sender and receiver • Speak at a moderate rate, using an
• Obscuring the message within a mass assuring tone
of communication

Meetings
Meetings can be an effective communication method for the manager. In order to ensure that the
meeting is effective and useful, it is important to adopt the following steps:
1. Determine the purpose of the meeting
2. Establish who needs to attend
3. Determine the agenda in advance and distribute it to those attending.
4. Make suitable arrangements for location and time in advance
5. Facilitate discussion.
6. Manage the plan of action..
7. Summarise..
8. Publish results/minutes.

❑ Problems with meetings and their solutions

SL Problems with meetings Actions to avoid problem

01 Poor preparation: inappropriate Selection should be based on someone
chairperson with the requisite range of communication
skills
02 Poor preparation: the objectives of the Ensure that an agenda is produced and
meeting are undefined and so unclear circulated prior to the meeting. During the
meeting, the chairperson should state the
objective(s) and must return the focus of
the meeting to the points on the agenda
03 There is hostility between some of the The chairperson will again need to
attendees exercise negotiation skills. Careful use of
a seating plan may help to reduce the
possibility of conflict. As a last resort, one
or both of the parties involved may be
asked to leave the meeting.
04 Lack of enthusiasm or interest in the For future meetings, ensure that only
meeting those with an interest in the meeting, or
whose view is required, are actually
invited to the meeting. For the current
meeting, suggest a short break or stress
the need to reach a conclusion
05 Attendees talk too much without regard The chairperson must impose some order
to the chairperson’s requests or on the meeting. Possible solutions include
structure of the meeting asking the participants to speak in
accordance with meeting protocols such
as a time constraint if necessary, or (worst
case) asking them to leave the meeting

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altogether
06 Attendees cannot reach an agreement The chairperson will need to exercise
concerning issues on the agenda negotiation skills to try to bring the
meeting to some agreement. If this is not
possible, then attendees may have to agree
to differ. However, some action points
may be required to ensure that more
information is obtained so agreement can
be achieved at the next meeting
07 There is hostility between some of the The chairperson will again need to
attendees exercise negotiation skills. Careful use of
a seating plan may help to reduce the
possibility of conflict. As a last resort, one
or both of the parties involved may be
asked to leave the meeting
08 Action points from previous meetings Assuming that minutes were issued
have not been carried out correctly, in the current meeting, the
chairperson should obtain reasons for
actions not being completed. For future
action points, ensure that each has a
person identified as responsible for
completing it. Check the minutes of the
meeting to ensure that all action points are
included
09 Minutes are either too long Ensure that the minutes are either minutes
(information overload) or too brief (do of resolution (which contain agreed
not include appropriate points) outcomes) or, if minutes of narration, that
they are sufficiently edited to provide the
flavor of the discussions, but not every
pause and cough

Negotiation
❑ Negotiation: Negotiation is an activity that seeks to reach agreement between two or more starting
positions. Negotiation is the process in which two or more parties (people or groups) reach
agreement on an issue even though they have different preferences regarding that issue (Griffin &
Moorhead).

❑ Bargaining Strategies: There are two general approaches to negotiation— distributive bargaining
and integrative bargaining.
• Distributive Bargaining –aimed at resolving pure conflicts of interest on substantive issues
e.g. hours of work and rate of pay.
• Integrative bargaining– aimed at finding a solution from which both sides will benefit
substantially.
Bargaining Distributive Bargaining Integrative bargaining
Characteristics
Goal Get as much of the pie as Expand the pie so that both parties are
possible satisfied
Motivation Win-lose Win-win

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Focus Positions (“I can’t go beyond Interests (“Can you explain why this
this point on this issue.”) issue is so important to you?”)
Interests Opposed Congruent
Information Low (Sharing information will High (Sharing information will allow
sharing only allow other party to take each party to find ways to satisfy
advantage) interests of each party)
Duration of Short term Long term
relationship

❑ The Negotiation Process/Different stages of negotiation:

1. Preparation and Planning: Before you start negotiating, you need to do your homework.
• What’s the nature of the conflict?
• What’s the history leading up to this negotiation?
• Who’s involved and what are their perceptions of the conflict?
• What do you want from the negotiation?
• What are your goals?

Once you’ve gathered your information, use it to develop a strategy.

2. Definition of Ground Rules: Once you’ve done your planning and

developed a strategy, you’re ready to begin defining with the other party
the ground rules and procedures of the negotiation itself.
• Who will do the negotiating?
• Where will it take place?
• What time constraints, if any, will apply?
• To what issues will negotiation be limited?
• Will you follow a specific procedure if an impasse is reached?

During this phase, the parties will also exchange their initial proposals
or demands.

3. Clarification and Justification: When you have exchanged initial

positions, both you and the other party will explain, amplify, clarify,
bolster, and justify your original demands. This step needn’t be
confrontational. Rather, it’s an opportunity for educating and informing each other on the
issues, why they are important, and how you arrived at your initial demands. Provide the other
party with any documentation that helps support your position.

4. Bargaining and Problem Solving: The essence of the negotiation process is the actual give-
and-take in trying to hash out an agreement. This is where both par-ties will undoubtedly need
to make concessions.

5. Closure and Implementation: The final step in the negotiation process is formalizing the
agreement you have worked out and developing any procedures necessary for implementing
and monitoring it. For major negotiations—from labor–management negotiations to bargaining

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over lease terms to buying a piece of real estate to negotiating a job offer for a senior
management position—this requires hammering out the specifics in a formal contract. For
most cases, however, closure of the negotiation process is nothing more formal than a
handshake.

❑ Negotiation approaches/Guidance for successful negotiation

Adopting the following approaches can facilitate the negotiation process:
 Focus initially on each side’s primary objective – minor negotiating points can become a
distraction in the early stages.
 Be prepared to settle for what is fair – if an agreement is not seen to be fair it is unlikely to
be stable. Maintain flexibility in your own position, this makes it easier for the other side to
be flexible as well.
 Listen to what the other side wants and make efforts to compromise on the main issues, so
that both sides can begin to attain their goals.
 Seek to trade-off wins and losses, so each side gets something in return for everything they
give up.

Mentoring
❑ What is mentoring?
Mentoring is most often defined as a professional relationship in which an experienced person (the
mentor) assists another (the mentoree) in developing specific skills and knowledge that will enhance
the less-experienced person’s professional and personal growth.
❑ What does a mentor do?
The following are among the mentor’s functions:

• Teaches the mentoree about a specific issue

• Coaches the mentoree on a particular skill
• Facilitates the mentoree’s growth by sharing resources and networks
• Challenges the mentoree to move beyond his or her comfort zone
• Creates a safe learning environment for taking risk
• Focuses on the mentoree’s total development

❑ What are the benefits of mentoring?

Enhancing strategic business initiatives
Encouraging retention
Reducing turnover costs
Improving productivity
Breaking down the "silo" mentality that hinders cooperation among company departments or
divisions.
Elevating knowledge transfer from just getting information and to retaining the practical
experience and wisdom gained from long-term employees.
Enhancing professional development.
Linking employees with valuable knowledge and information to other employees in need of such
information
Using your own employees, instead of outside consultants, as internal experts for professional
development

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Supporting the creation of a multicultural workforce by creating relationships among diverse
employees and allowing equal access to mentoring.
Creating a mentoring culture, which continuously promotes individual employee growth and
development.
Managing Finance Function
❑ Business Process Outsourcing (BPO): Business process outsourcing (BPO) is a method of
subcontracting various business-related operations to third-party vendors. It is a business practice
in which one organization hires another company to perform a task (i.e., process) that the hiring
organization requires for its own business to successfully operate.

Advantages/benefits of outsourcing: There are many reasons why a business may choose to
outsource a particular task, job or a process. For example, some of the recognized benefits of
outsourcing include:

improved focus on core business activities - outsourcing can free up your business to focus on its
strengths, allowing your staff to concentrate on their main tasks and on the future strategy
increased efficiency - choosing an outsourcing company that specializes in the process or service
you want them to carry out for you can help you achieve a more productive, efficient service, often
of greater quality
controlled costs - cost-savings achieved by outsourcing can help you release capital for
investment in other areas of your business
increased reach - outsourcing can give you access to capabilities and facilities otherwise not
accessible or affordable
greater competitive advantage - outsourcing can help you leverage knowledge and skills along
with your complete supply chain

Disadvantages/drawbacks of outsourcing: Outsourcing involves handing over direct control

over a business function or process to a third party. As such, it comes with certain risks. For
example, when outsourcing, you may experience problems with:

Service delivery - which may fall behind time or below expectation

Confidentiality and security - which may be at risk
Lack of flexibility - contract could prove too rigid to accommodate change
Management difficulties - changes at the outsourcing company could lead to friction
Instability - the outsourcing company could go out of business

❑ Shared Service Center (SSC)

Definition and scope: The finance function across the organization may be consolidated and run as
central unit, or a shared services Centre (SSC). A SSC refers the provision of a service by one part of
an organisation or group where that service had previously been found in more than one part of the
organisation or group.

An example would be a large multinational organisation with financial processing centres in all or
several of the countries in which it operates, chooses to consolidate these activities at one site or
shared service centre (SSC).

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It is sometimes referred to as ‘internal outsourcing’. It allows an organisation to investigate the
potential benefits of consolidation of activities, whilst maintaining full internal control and thus
minimizing the control risks often associated with the assignment of control to an external party at the
centre of the outsourcing option.

Benefits/advantages of shared services: The key driver and benefit of shared services is driven by
increased productivity for all of the various parts of the organisation. Taking individual businesses
where there is no critical mass and moving them into a more industrialized model enables better
economies.
 Headcount reductions - Given the example of large multinational it is conceivable that by
consolidating each countries processing into one shared service centre using a common
financial processing system the more routine functions would benefit from economies of scale,
so that the same volume of processing and overall activity might be performed by fewer
employees.

 Reduction in premises and associated costs – which might include security, insurance, etc.
 Potential favourable labour rates in the chosen geographical location.
 Quality of service provision – this is because the establishment of a shared service involves
not only a change of organisational geographical location but often changes in the philosophy
of internal service provision.
 Consistent management of business data – the processes can be standardised to
organisational ‘best in breed’.

Drawbacks of SSC:
 Loss of business knowledge- The finance function may not have a detailed knowledge of each
part of the business.
 Further from everyday decision making- The SSC will be unlikely to have day-to-day
contact with the business areas which it supports; it may therefore lack the required knowledge
to provide up to date information for decision making.
 Business relationships are not as strong- The SSC may not be able to build strong business
relationships with the business areas, which may result in them not performing for the business
area as well as they could.

Developed By
Md. Shahadat Hossen ACMA
Deputy Director & Head of Finance
Dhaka Shishu (Children) Hospital

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