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MAINTAINING HUMAN RELATIONS WITH BUSINESS GROWTH: Importance of the Human Rerations Issue

Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Distinguished Visiting Fellow at the Institute of Advanced Studies in the Humanities, University of Edinburgh, Scotland, publisher of www.GavdosPress.com.  Founder and former CEO, JPIndusries, Inc., a Fortune 500 industrial corporation

In this series of articles, we examine the human relations issue in the corporate environment for growth. After a discussion on what is “Human Relations” it would be very instructive to browse through a set of questions in order to focus your thoughts on human relations in your own company.

Overall we will write articles on the following aspects of this major topic:

WHAT IS HUMAN RELATIONS?

ASSESSING YOUR HUMAN RELATIONS STRATEGY

IMPORTANCE OF THE HUMAN RELATIONS ISSUE

CHARISMA, CORPORATE CULTURE AND SHIFTS IN HUMAN RELATIONS

CHOICE OF VALUES

HOW FIRMS SHARE VALUES AND GOALS

EFFECTIVENESS OF HUMAN RELATIONS STRATEGIES

CHANGE IN THE APPROACH TO FOSTERING SHARED VALUES

RETAINING COMMITMENT TO MISSION WITH GROWTH

BUILDING CULTURE AT JPI

SOME GUIDELINES FOR EFFECTIVE HUMAN RELATIONS

As we will show in a later article, human relations is an integral part of the Dynamic System Model of managing the business.  We find links to most indicators of organization effectiveness, including profitability, sales growth, work flow, public relations and technical mastery.  Human relations is also linked to resource acquisition and resource allocation.  In short, it is intertwined with all the key issues of managing well.

Morale and profits are linked. The relevance of human relations has been debated over several decades because its effects are delayed or lagged — a phenomenon Likert first noted in the 1950’s.  These results are less apparent in cross-sectional studies–those that test ideas by comparing people or companies at the same point of time.  Lagged effects clearly show up in our own study, reinforcing Likert’s long-standing claims that morale and profits are linked.

Growth boosts morale. Our findings further suggest that rather than straining relations among people, rapid growth may be a boost to morale.  It is much more exciting to be part of a success.

Human relations is linked with work flow, company image and productivity. Not surprisingly, firms with better human relations report smoother work flow, too.  Employees can serve as ambassadors of goodwill–or harbingers of ill will.  Poorer morale is reflected in a worse reputation. Of the different components of technical mastery, productivity is most closely linked to human relations effectiveness, including morale and goal integration.

Human relations is also clearly linked with resource acquisition and allocation but we lack the right kind of data to pin down which is the cause. We might guess, though, that when people have the right resources to work with, they do their jobs more easily and encounter fewer frustrations.

 

For an in depth treatment of this management process read the four related articles recently published in this magazine and the book:

“Dynamic Management of Growing Firms”
University of Michigan Press. 1998

 

 

MAINTAINING HUMAN RELATIONS WITH BUSINESS GROWTH: Assessing your Human Rerations Strategy

Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Distinguished Visiting Fellow at the Institute of Advanced Studies in the Humanities, University of Edinburgh, Scotland, publisher of www.GavdosPress.com. Founder and former CEO, JPIndusries, Inc., a Fortune 500 industrial corporation.

In this series of articles, we examine the human relations issue in the corporate environment for growth. After a discussion on what is “Human Relations” it would be very instructive to browse through a set of questions in order to focus your thoughts on human relations in your own company.

Overall we will write articles on the following aspects of this major topic:

WHAT IS HUMAN RELATIONS?

ASSESSING YOUR HUMAN RELATIONS STRATEGY

IMPORTANCE OF THE HUMAN RELATIONS ISSUE

CHARISMA, CORPORATE CULTURE AND SHIFTS IN HUMAN RELATIONS

CHOICE OF VALUES

HOW FIRMS SHARE VALUES AND GOALS

EFFECTIVENESS OF HUMAN RELATIONS STRATEGIES

CHANGE IN THE APPROACH TO FOSTERING SHARED VALUES

RETAINING COMMITMENT TO MISSION WITH GROWTH

BUILDING CULTURE AT JPI

SOME GUIDELINES FOR EFFECTIVE HUMAN RELATIONS

Goal Integration
Questions 10-1 to 10-5 examine goal integration, the degree to which organizational and individual needs match or mesh with each other. Though more appropriate to ask in a confidential employee survey than of yourself, you may want to skim through them anyway. For each of the five questions consider:
TO WHAT EXTENT DO EACH OF THE FOLLOWING DESCRIBE YOUR FIRM?
[1] To a very great extent
[2] To a great extent
[3] To some extent
[4] To a small extent
[5] To a slight extent or not at all
Question 10-1: Clear understanding of company objectives. People have a clear understanding of company objectives.
Question 10-2: Self-centeredness of employees. Everyone looks out just for themselves, rather than doing what is best for the firm.
Question 10-3: Intention to leave. Employees think about quitting.
Question 10-4: Insecurity of employees. People feel insecure about their place in the company.
Question 10-5: Lack of understanding of objectives. People lack understanding of where the firm is heading.
Question 10-6: Morale. For lower level employees, how would you rate their morale, job satisfaction and commitment to company objectives?
[1] Very high: Top 2 percent of the industry
[2] High: Within top 10%
[3] Well above average: Top 25%
[4] Above average: Top one-third
[5] Average: About the middle
[6] Slightly below average: in the top two-thirds
[7] Well below average: Bottom one-third
Question 10-7: Consistency of mission. To assess how consistent your view of the firm’s mission is with those of your managers, follow these four steps:
Step 1: What do you see as the firm’s primary mission, including products and services offered, and anything else defining its main direction and purpose? ( Refer to Question 5-11).
Step 2: Give this same question to your managers. Ask them to record their answers without discussing it first.
Step 3: Now compare the consistency of CEO and manager answers. Are they:
[1] Word for word (reads like the same mission statement)
[2] Same content, though different words
[3] Substantially the same (50-75% overlap of key issues)
[4] Some similarity (25-50% overlap in key issues)
[5] Very slight overlap (5-25%)
[6] Totally different
Question 10-8: Types of values emphasized. As CEO, do you emphasize certain values that you feel are especially important to the success of the business? What are they?
Question 10-9: Consistency of values.
Step 1: Without discussing your opinions, ask managers:
“Does your CEO or president emphasize certain values he or she considers especially important to the firm’s success? What are they?”
Step 2: Compare manager and CEO answers and rate their consistency. Are they:
[1] Word for word (reads like the same statement)
[2] Same content, though different words
[3] Substantially the same (50-75% overlap of values)
[4] Some similarity (25-50% overlap in values)
[5] Very slight overlap (5-25% overlap in values)
[6] Totally different (no overlap in values mentioned)
Question 10-10: How effectively values are shared. If you answered yes to question 10-8, ask yourself: Do you have a particular way of sharing values with your employees? If so, how well does this technique or strategy work?
[1] Extremely well
[2] Very well
[3] Fairly well
[4] Not so well
[5] Not well at all
Table 10-1 shows how firms in our study stack up in human relations. For some measures, the percentages for all firms are very similar to those for the top firms. The sharpest contrasts are in questions 10-1, 10-6, 10-7, 10-9, and 10-10. Employees have a clear understanding of company objectives (to a great or very great extent) in 44 percent of top performing firms compared with 31 percent of all firms. Morale is also better at the typical top performing firm– rated in the top 10 percent of the industry by 71 percent of top-performing CEOs, compared with 57 percent for all firms combined. Based on question 10-7, at almost 18 percent of the top-performing firms but only 6 percent of firms as a whole, at least two-thirds of the managers share the same content if not the identical language in describing the firm’s mission (though both are low percentages!). CEOs of top performing firms also have an easier time conveying values. Similar values are reported by the CEO and managers in almost 30 percent of top performers, but in only 12 percent of all firms combined (question 10-9). Finally, 50 percent of top performing CEOs feel their values are shared extremely well compared with only 36 percent for all firms combined (question 10-10).
____________________

Table 10-1: Human Relations Effectiveness for Top Performers and All Firms Combined

All Firms Top Performers
Median % %

Clear understanding of 3.0 31 a 44 a
company objectives
(quest. 10-1)

Self-centeredness of
employees (quest. 10-2) 4.0 16 b 13 b

Employees think of quitting 4.0 22 b 17 b
(quest. 10-3)

Insecurity of employees 4.0 19 b 22 b
(quest. 10-4)

Lack of understanding of 3.7 31 b 26 b
objectives (quest. 10-5)

Morale (CEO view) 2.0 57 e 71 e
(quest. 10-6)

Morale (Management view) 3.0 28 e 36 e
(quest. 10-6)

Consistency of mission 4.0 6 c 18 c
(quest. 10-7)

Consistency of values 4.0 12 c 29 c
(quest. 10-9)

How effectively values 2.0 36 d 50 d
are shared (quest. 10-10)

__________________________

a Answered [1] To a very great extent or [2] To a great extent
b Answered [1] To a very great extent; [2] A great extent or [3] To some extent.
c Percentages of firms where at least two-thirds of the managers share the same content if not the identical language.
d Percentage who say the strategy is working out “extremely well.”
e Morale rated within the top 10 percent in the industry.

MAINTAINING HUMAN RELATIONS WITH BUSINESS GROWTH: What is Human Relations?

Dr. John Psarouthakis, Executive Editor of www.BusinessThinker.com, Distinguished Visiting Fellow at the Institute of Advanced Studies in the Humanities, University of Edinburgh, Scotland, publisher of www.GavdosPress.com.  Founder and former CEO, JPIndusries, Inc., a Fortune 500 industrial corporation

In this series of articles, we examine the human relations issue in the corporate environment for growth.  After a discussion on what is “Human Relations” it would be very instructive to browse through a set of questions in order to focus your thoughts on human relations in your own company.

Overall we will write articles on the following aspects of this major topic:

WHAT IS HUMAN RELATIONS?

ASSESSING YOUR HUMAN RELATIONS STRATEGY

IMPORTANCE OF THE HUMAN RELATIONS ISSUE

CHARISMA, CORPORATE CULTURE AND SHIFTS IN HUMAN RELATIONS

CHOICE OF VALUES

HOW FIRMS SHARE VALUES AND GOALS

EFFECTIVENESS OF HUMAN RELATIONS STRATEGIES

CHANGE IN THE APPROACH TO FOSTERING SHARED VALUES

RETAINING COMMITMENT TO MISSION WITH GROWTH

BUILDING CULTURE AT JPI

SOME GUIDELINES FOR EFFECTIVE HUMAN RELATIONS

 

WHAT IS HUMAN RELATIONS?

Effective human relations refers to the extent individual employees are willing to accomplish overall organizational objectives.1  We refer to willing here rather than to actual doing because many other factors come into play, in addition to employee predilection in determining actual performance–appropriate fit of skills and talents, accurate expectations, sufficient tools and assistance, and other factors beyond even the firm’s control.  Though they overlap somewhat, we look at five components of human relations effectiveness:  1) morale — overall job satisfaction and commitment of employees; 2) goal integration –consistency of organization and individual goals; 3) a consistent view of the mission by CEO and managers; 4) a consistent view of values; 5) how effectively values are shared.

The human relations movement can be traced back to the Hawthorne Experiments in the 1930s.2  Hawthorne researchers were originally interested in effects of light and noise on worker productivity in a sewing machine factory.  Their unexpected results showed no correlation between illumination and worker output.  In some trials, the darker it got, the more workers produced.  Obviously, light levels alone were not affecting performance.  Though a number of alternative explanations existed, they all pointed to “people” factors.  The results of the Hawthorne experiments and others by Roethlisberger and associates triggered systematic research into the connection between employee attitudes and performance.

The human relations movement can also be traced to motivation theorists include MacGregor, Likert, Herzberg, and Maslow–all of whom looked beyond the economic models of work behavior to more complex psychological needs workers desire from the workplace.3 These needs include praise, recognition, power, accomplishment, and pride from a job well done.

Our growing understanding of human behavior underscores the importance of providing opportunities  for people to fulfill individual and organizational needs simultaneously.  Without this link, the firm will experience increased absenteeism, turnover, vandalism, grievances, strikes and litigation.  Where human relations are poorly managed, people may quietly sabotage their work efforts or simply work in a sloppy manner.  Worker attitudes are also linked to the quality of output.   Committed employees feel more pride of workmanship.  How do firms foster such pride?  As many have discovered, no amount of pleading or threatening will improve employee performance as effectively as positive approaches. Today’s workers may not be better educated, but they certainly have higher expectations than their forebears and most won’t work for money and job security alone.    Empowering employees and managers to make decisions is far more effective than “idiot-proofing” jobs.

Despite 35 years of field research pointing to the worker’s importance in the overall company success, a major beating by the Japanese is what finally made this sink in.  Ironically, much of Japan’s success is traced to a U.S. citizen, Dr. Deming.  Known for his work in statistical process control,  Deming’s philosophy is grounded in early motivation theorist Douglas MacGregor and his Theory Y view of workers.  Theory Y asserts that the employee wants to do a good job, and does so when given the chance. 4  We now see more American companies implementing Theory-Y human-relations concepts, adding new twists as they go.  McDonald’s has demonsrated that these ideas even work in Russia!

Next article will be:  ASSESSING YOUR HUMAN RELATIONS STRATEGY