Management report..furguson
Download as DOC, PDF2 likes733 views
Ferguson Associates is a management consulting firm in Pakistan that follows a flat organizational structure with directors responsible for the four functions of management in their departments. The directors plan effectively, organize with a fluid structure but weaknesses in retaining employees, lead subordinates through team management and motivation, and closely control performance. While generally performing management functions well, the directors could improve in organizing human resources.
Management report..furguson
- 1. EXECUTIVE SUMMARY OBJECTIVE: The objective of the report is to identify the four functions of management performed in Ferguson Associates, a private limited company providing Management Consultancy Services throughout Pakistan. OBSERVATIONS: Ferguson Associates has a flat divisional structure, with a director at the top of each divisional department. Each director is himself responsible for carrying out the four management functions, namely, planning, organising, leading and controlling, for his department. Ferguson Associates has a mission statement that spells out its emphasis on quality, integrity, and customer satisfaction, and all its corporate objectives are directed towards the attainment of this mission. It has a strategy of differentiation and a policy of positioning, which it implements through leadership tools, human resources, and customer feedback. The decision making is decentralised, and is spread throughout the levels of the organisation, with the final decision being taken by the departmental director. As for organising, the company has a highly fluid and flat structure that gives it the advantage of responsiveness to the environment. The directors have a moderate span of control, and delegation and accountability are embedded in the structure. However, the company has its weakness in the area of retention of the employees due to lower levels of monetary compensation. The directors are responsible for leading their subordinates as well. They are quite effective in this regard, too. They have a team management style, and are concerned both with performance and quality, and welfare of the subordinates. They provide intrinsic motivation to their employees through challenging goals and creative tasks, and follow the open-door policies for communication. They have a definite corporate culture with values that again reflect the mission statement. The directors monitor the performance of the subordinates on an ongoing basis and control them through close supervision. They make sure that they are providing quality services and satisfying the customers, and also take corrective actions when the need arises. They maintain strict financial control and the subordinates are not provided the information about the net annual profitability of the company. CONCLUSION: The responsibility for planning, organising, leading and controlling the department and the subordinates is on the shoulders of the directors. With the exception of a few flaws, especially in the area of organising the human resources, these directors are performing these functions well and have thus been able to keep the company on the track of profitability and success. COMPANY PROFILE Ferguson Associates is a private limited company that provides Management Consultancy Services (MCS) throughout Pakistan. Originally, these services were provided by a partnership firm called A. F. Ferguson & Co. which was established in 1890. However, in the 1960’s, a separate company was formed and this part of business was handed over to it. A. F. Ferguson & Co. continues to provide audit and tax services. Both A. F. Ferguson & Co. and Ferguson Associates put together, are known as The Ferguson Group. For a long time, Ferguson has been a member of Price Waterhouse, which has recently merged with Coopers & Lybrand to become Price Waterhouse Coopers, now the biggest firm of its kind in the world. LIST OF SERVICES: The management consultancy services provided by Ferguson Associates include the following: Chain Management Business Process Reengineering Computer Package Implementation Information System Risk Management Computer Package Evaluation Special Investigation Share Registration Services Executive Recruitment Services Salary Surveys Financial Modelling Corporate Restructuring
- 2. Organisational Studies System Development Development of Sales Manual EXTERNAL ENVIRONMENT: The external environment affecting Ferguson Associates can be divided into: THE GENERAL ENVIRONMENT: The multinational Price Waterhouse Coopers requires its member Ferguson Associates to keep up with the developments taking in the international and technological sectors. It encourages its local subsidiary to incorporate the latest business trends and concepts while also being competent with respect to the new tools and technological methods surfacing in the international arena. Besides since most of its clients are MNCs with head offices abroad, they demand world class services from Ferguson Associates. Similarly with the increasing demand of the consultants in the market, their expectations of monetary compensations are also rising. However, the legal/political or the economic environment does not have much effect on this company. It is relatively immune to changes in these sectors of the environment. THE TASK ENVIRONMENT: The consumers of Ferguson Associates are multinational companies and large local organisations seeking management consultancy services; its sole supplier is the labor market that includes graduates from IBA, LUMS, ICAP, and foreign institutions. The major competitors are Taseer Hadi & Co., Sidat Hyder & Co., and Shah Rehman & Co. THE MISSION STATEMENT We strive to provide a broad and co-ordinated range of excellent, timely, value-for-money services that help our clients make the best business decisions. We are committed to meeting the expectations of our clients by maintaining international standards and fully exploiting the advantages of technology. As custodians of a long-established institution of national importance, our partners and staff maintain the highest reputation for integrity and quality and we will continue to strive to increase the quality and the integrity of business processes, thereby contributing to the development of our society. THE CORPORATE OBJECTIVES Ferguson Associates has a very flat hierarchy, consisting of just three layers. Thus, most of the goals setting and planning activities are handled by the top management. The objectives of this company can be classified as: STRATEGIC GOALS: The strategic goals of the company, along with the strategic plans, are decided by the directors for a term of about 10 years. However, they are reviewed every year in the meeting of the directors to make sure that they are in line with the changing environment. They are: To continue to be the leading organisation providing the Management Consultancy Services. To attract and retain the best professional staff. To project an outstanding corporate image. To exceed customer satisfaction through the strategy of “under promising and over delivering”. TACTICAL GOALS: These goals together with the plans to achieve them, again, are devised by the top management of the company on an annual basis. To ensure that these objectives are achieved, mainly through marketing, is the job of the director of each division. For this year, these goals are: To increase the revenues by 15% as compared to last year. To ensure that each section – Information Technology, Human Resource, Public Sector, Corporate Affairs, and Share Registration – shows an increment by almost the same proportion, that is, 15%. To grow in terms of clientele and staff, in order to achieve the profitability targets. OPERATIONAL GOALS: The company assigns all its projects and assignments to teams. These teams consist of consultants from the particular division that the project pertains to, and has a project or team leader. These teams are dissolved after the completion of the project, which takes about 2 to 3 months each. The director of the particular division assigns the deadline for the submission of the report regarding the project to the team leader, after negotiations with the client. Hence the proposal given to the client
- 3. is the main criterion for the short-term goals. The team leader is responsible for making sub teams within his team, for the subdivision of duties, for specifying individual, short-term goals regarding the assignment. He is also responsible for deciding on the methodology to meet the team’s targets. However, he has to get his plans approved by the director of his division. Most of the goals to be achieved in Ferguson Associates are specific, measurable, challenging, realistic, and bounded by a specified time horizon. However, these goals are not linked to monetary rewards. The model of planning followed is Management By Objectives (MBO) whereby all the employees are involved in the process of making objectives and setting goals, and then reviewing and assessing subsequent performance against these targets. GRAND STRATEGY The grand strategy followed by Ferguson Associates is that of continuous growth. They have an overall grand strategy of a minimum of 12% growth as compared to the previous year. Keeping in line with this strategy, the firm internationally went through a merger to become the biggest company of its kind. CORPORATE-LEVEL STRATEGY: In the BCG Matrix, Ferguson Associates can be classifies as a star, since the business is rapidly growing and it is enjoying the highest market share in Pakistan. However, the other company in the same group of companies, A. F. Ferguson & Co., is a cash cow since the auditing and tax consultancy business has already reached the maturity stage. In spite of this fact, A. F. Ferguson is more profitable because it has a higher clientele. Hence, they are both pooling in their profits to help each other. While formulating the corporate-level strategy, Ferguson Associates establishes the key variables, measures performance in those key areas, compares it with other competitors and client ideals, and subsequently formulates and implements the strategy. Hence, to be able to do so, they maintain a high level of awareness, and establish client loyalties. BUSINESS-LEVEL STRATEGY: Out of Porter’s competitive strategies, Ferguson Associates is aggressively following the differentiation one. It has the policy of positioning, based on attributes and benefits conferred by Ferguson Associates, and which can then be used as a focal point for management effort to maximise penetration of the market and to maximise profitable usage of staff. This policy results in the differentiation of Ferguson Associates significantly from its competitors, the communication of a distinctive corporate image, and a basis for integrating and focusing all business development activities. It differentiates its services on the basis of their very high quality and through the policy of under- promising and over-delivering. It also makes sure that its consultants are providing key benefits to the clients, for example, helping him make better decisions, be more successful, and have more control; enhancing his effectiveness, working closely with him (the client) as a team; giving him added pride by providing a high quality service, etc. Hence is able to not only fight the competition but also shun the threats from any potential new entrants. Four out of the earlier-mentioned services provided by Ferguson Associates are in the growth stage, four in the maturity stage, and six in the declining stage. However, since the firm is able to adapt to the changing environment quite rapidly, and through time-based competition, it is still in the growth stage. Hence, its differentiation is very appropriate for this stage. Ferguson Associates has a strategy of combining marketing aggressiveness with organisational responsiveness to match environmental turbulence. FUNCTIONAL-LEVEL STRATEGY: The various divisions of the company adopt strategies to support the business-level strategy, that is, most of them are providing high quality services in their respective areas to differentiate the firm as a whole. IMPLEMENTATION OF THE STRATEGY: The directors use leadership qualities and human resources as tools for putting strategy into action. They pose as role model for all the subordinates and lead the way in differentiating the firm from others in the business. Besides, since the firm has a high turnover rate, and is often involved in recruitment, it is able to hire according to the changing environmental conditions and on the basis of the strategy they adopt. More specifically, they are using the following tools to implement their differentiation strategy: Feed back marketplace attitudes Correct any marketplace misperceptions Monitor competitor activity Build client databases for targeting, contact programs, and selectivity analysis
- 4. Conduct specific research Revise recruitment criteria Revise appraisal and reward systems Hire outside professionals Hire opinion leaders Use psychometric tests Train with respect to technical, interpersonal, and tactical selling skills Enhance service delivery New product development Pricing policies Cooperation and coordination between service lines National and international networking Cost analysis and control Client criteria DECISION-MAKING The decision-making process in Ferguson Associates is decentralised. The model used is classical, whereby the directors take their time while making decisions and explore and evaluate all the possible alternatives before choosing the rationally economic one. The director discusses about the acceptance of the proposal given by the client with his subordinates, then he asks them to draft the final proposal, and leaves the methodology to be adopted during that project up to the discretion of the team. While recruiting new employees, the director asks his consultants to interview the prospective applicants and shortlist them. Then the director personally interviews the employees recommended by the consultants, and then makes the final decision about the selection himself. The third important decision is about technology acquisition; her again, the director takes the suggestions and recommendations of his employees before taking the final decision. Hence, the style of decision-making followed by the directors of Ferguson Associates, according to the Vroom-Jago model, is CII. That is, the director asks for the suggestions and ideas of his consultants or subordinates in a group, and then takes the final decision himself. However, the remaining decisions, that are mainly related to the assignments or projects under process, are taken by the team responsible for that particular project, with or without the approval of the director, depending upon the decision itself. The group participation format used while taking any type of decision is interactive, that is, the members come together with a specific agenda and decision goals, and openly discuss the problem until they reach a consensus. And in order to increase the breadth and creativity of these decisions, which is important to abide by the differentiation strategy, brainstorming technique is used. That is, the members are encourage to come up with even far-fetched ideas and present them in a non-critical fashion, during the interactive group discussions. ANALYSIS OF THE ORGANISATION STRUCTURE DEPARTMENTALISATION: The organisational structure is quite a flat one, with only three layers of hierarchy. Besides, there is an accountant and a receptionist who are responsible to carry out their functions for all the departments. The managing director is at the top of the chain of command and chairs the board meetings. He takes care of the organisation’s administration, and makes the decisions regarding major issues, like purchase of new office space, etc., with the involvement of the directors. The director of each department is responsible for the initial contact with the clients. He sees the nature of the job and the degree of complexity, and accordingly formulates a team through a discussion with his consultants. The teams are formed on the basis of availability, competence, experience, and expertise. They may be as small as 3 members, to as large as 40. The consultants are the ones who are made the members of this team, with a team leader based on experience and technical ability relative to the particular assignment. Although the consultants all report to the director and are considered a single layer in the structure, and are even collectively called consultants, there are various levels among them. These, in descending order, are: Managing Consultant, Supervising Consultant, Consultant-I, Consultant-II, Assistant Consultant, and Consulting Assistant. The approach to departmentalisation is divisional since the consultants are not grouped based on their areas of expertise. In fact, each division has consultants from various backgrounds, and are grouped on
- 5. the basis of a similar project outcome. Hence, the employees get a general management training and are able to develop diverse skills due to working with colleagues and team members from differing areas of expertise. FLUIDITY: The structure is highly fluid; there is an efficient manner in which the primary structure forms into a temporary workable flow, and then dissolves to allow for another team to be created. The ability to stay so flexible is one of the highlights of this firm. This feature of the structure gives the consultants the ability and opportunity to work with different colleagues – providing them a change as well as the richness of ideas from different people. Every one gets a chance to act as a manager, as team leaders vary from one task to another, depending on its requirements. WORK SPECIALISATION: The work specialisation is high, with each director responsible for only a particular function, and each consultant for a particular aspect of the assignment, which is his expertise. In spite of this fact, there is no boredom or monotony as each assignment is different and calls for making the best use of the creative and professional skills of the team members working on it. AUTHORITY AND RESPONSIBILITY: The consultants have to report to the team leader whenever they are part of a team and to their respective departmental director as well. They are monitored on an on-going basis by both of them, which serves as an effective control mechanism. The consultants have a lot of authority, responsibility and information relative to the assignments that they are working on. However, all the information and authority relative to the organisation as a whole, particularly the financial aspects, is confidential and even the consultants are not aware of it. ACCOUNTABILITY: There is a high degree of accountability with respect to performance on the assignments and service to the customers. Apart from that, the consultants use their own discretion over the timings of their arrival and departure. This laid-back style gives them the feeling of having a control over their lives and jobs, thus satisfying and motivating them as well. Hence, they make sure that they give the best in return to their directors. This increases their performance, the quality of their work, and customer satisfaction. Even the directors have to report to the Chairman and other participants during the meeting of the board of directors every month. DELEGATION AND CENTRALISATION: The tasks are delegated as well. In most of the assignments, the director works as a facilitator, and overseer, and the team members do most of the work. This shows that the centralisation is low as well, as the team members are authorised to take most of the decisions regarding the assignments. And, even while taking other organisational decisions like recruitment of new employees, the consultants are asked for their suggestions, which are properly considered. SPAN OF CONTROL: The span of control for the directors is 10 to 15 employees, with as low as 7 for one and as large as 25 for another. The low span is not due to a tall structure, as the structure is very flat, but it is due to the fact that the organisation is a small one, and the turnover rate is high. The organisation structure, which is organic and flexible, with all these characteristics, is suitable for a firm utilising service technology, that is characterised by intangible outputs and direct contact between the employees and the customers. COORDINATION: The coordination within departments is very high, partly due to the informal and laid-back environment with no communication gaps, and partly due to the use of teams. However, the coordination across departments is poor and there is a big communication gap. This is because no cross-functional teams or integrators are used, as the departments are independent, and there is no flow of work between them. ORGANISATIONAL CHANGE: The most important change that takes place in the organisation structure is when one of the consultants is promoted to the position of a director, and a new department is set up for him, either by starting a new service, or by dividing the task handled by one service, into two departments. However, no resistance or problems surface in these kinds of change. The other change that takes place is normally a change in the technology or the introduction of a new service. In both these decisions, the employees are asked for their suggestions, and hence, they are committed to these changes and accept them readily. Besides, these changes are also accompanied by training of the employees to cope up with the change, and develop capabilities according to the client needs in the market.
- 6. The structure is so neatly and simply laid out that is allows for quick and new elements to be made a part of the organisation; hence, adaptability is one of its key features. RESOURCE ALLOCATION: As far as resource allocation is concerned, the director of each department has the authority to utilise the organisational resources whenever needed for the functions of his department. These resources may be capital, human or any other available. ORGANISING THE HUMAN RESOURCES The Human Resource Management functions for each department are also handled by the directors. The consultants are recruited as the assignments come up and the need for more employees becomes evident. Hence there is no forecasting or human resource planning done. And even, when the employees leave, the replacements are not hired until the need for doing so arises in the form of a high number of assignments. ATTRACTING: During the process of recruitment, the consultants conduct the screening interviews of to shortlist the prospective employees. Then the final hiring interviews are the responsibility of the director himself, who takes the final decision. During the interviews, questions relevant to the area of expertise of the interviewee, and the assignment for which he is being hired, are asked to check his appropriability for the assignment. After they are hired, the employees are put on a probation period for six months to monitor their performance, during which the employee can leave or can be terminated without prior notice; however, this has never happened. DEVELOPING: The training of the employees is done through on-the-job instructions and through experience and exposure. Besides, both the directors and the consultants are also sent to various relevant seminars to keep them abreast with the latest market trends and concepts. The performance appraisal is carried out on the first of July every year, when every director appraises his consultants on the basis of a performance appraisal form. Then, a counselling interview is held between the director and the consultant in whom the director gives the consultant feedback on his performance throughout the year in a thorough and sensitive manner. These are conducted in an informal environment with a two-way communication. However, the employee is not shown his appraisal form, which contains the rating of employees on the accuracy of their work, punctuality, initiative, responsibility, neatness of work, organisation, career development, training of colleagues, communication, relationships with clients, colleagues, etc. MAINTAINING: The salary structure is a conventional one. The starting salary for each post is fixed, and increments are all merit-based, following from the performance appraisal. As compared to competitors, Ferguson claims to be paying its consultants highly. However, as compared to the entire market or industry, the compensation offered by Ferguson is quite low, which is the reason for the high turnover rate. The managers are also given cars, and medical allowance is reimbursable up to a certain level, different for each position. The facility of the provident fund is also available, in which 10% of the salary of each employee is pooled in by Ferguson itself, and the other portion is the 10% of the salary of the employee kept back for this purpose. The employees are rarely terminated; however, those who leave, have an exit interview to determine the reasons behind this decision. These reasons normally are the opportunities for better prospects. LEADERSHIP STYLE The Chairman of the firm is at the top of the hierarchy, but he is not directly involved in its operations. He is only responsible for taking major administrative decisions regarding the company, while the major role of leading the subordinates is played by the departmental heads for their respective departments. These leaders focus on three primary areas: Managing business with an enterprise perspective – while exercising mutual respect and cultural sensitivity. Encouraging the creation of innovative, integrated and commercial solutions to the clients’ complex problems. Ensuring that the structure leverages the company’s unique breadth and depth to get the best from all the departments and human resources. The leadership style used in all the departments of Ferguson Associates is democratic, due to the high degree of delegation and participation. The management style is team management, and boasts of a 9,9 scale on the leadership grid, because the directors are highly concerned with both the task activities and
- 7. the welfare of the subordinates. Hence, they generate commitment among the consultants, who fulfil the expectations of their directors as regards the assignments, and do not exploit the authority given to them in terms of flexible scheduling. The leader-member relations are good, the leader position power is strong, but the task structure is low. This corresponds to the Situation III according to Fielder’s contingency theory that is moderately favorable. Hence, the relationship-orientation is very suitable and appropriate in this situation. Again, judging it according to Hersey and Blanchard’s situational theory, the task readiness of the consultants is High, or R4, and hence, the combination of participating and delegating used by the departmental heads is effective. Now, coming to the Path-goal theory, the personal characteristics or the abilities of the subordinates are excellent and highly suitable for their tasks. However, the work environment is moderate; this is because, the tasks are creative and ambiguous, and the formalisation is low. In this case, the combination of achievement-oriented, supportive and participative styles shown by the directors leads to high performance and satisfaction. The directors are achievement-oriented because they set high goals regarding the assignment and customer satisfaction for their teams of consultants to meet, show confidence in the consultants, and assist them in achieving their goals. They are supportive as they use teams and treat subordinates as equals, and have a highly open communication system. They are participative since they encourage the involvement of the employees in decision-making and make use of group discussions. However, the reward used by the leaders are non-monetary. They do not give high monetary incentives, rather they focus on giving challenge to satisfy esteem needs, and praise and recognition as a reward for the employees. This is the drawback of their leadership, since these rewards may not be the right ones for all the subordinates. MOTIVATION The major motivating aspects of jobs in Ferguson Associates are that they provide rich learning experience and mental stimulation through challenging, varied and creative tasks. Not only that, the personal marketability of the consultants of this firm is quite high and this leads to better prospects for them. However, as mentioned earlier, the monetary compensation and incentives are relatively lower. To compensate for this, the directors use intrinsic motivation tactics for them. They give them positive feedback whenever they perform well, praise them highly for a job well done in front of the whole staff, and highlight the outstanding aspects of performance to motivate them as well as the others. And even if the director has to give negative feedback, he calls the particular employee, discusses what went wrong, and suggests how corrective actions can be taken. These consideration activities lead not only to motivation, but to satisfaction and commitment as well. In case of conflicts in the teams, the team members are encouraged to solve them themselves with the help of the team leader. However, if this fails, then the director gets involved, calls a meeting, finds out what is wrong, discusses corrective actions, and if needed, warns those causing the conflict. In order to motivate the employees by satisfying their various needs, they are given full security of the job since people are extremely rarely fired, and they are even given extension after retirement. The work environment is flexible, and informal, with low degree of accountability, and hence the social needs are fulfilled. Besides, an annual dinner is also held without failure in which not only the employees, but the clients are also invited along with their families. The employees are also ensured of internal fairness, and procedural and distributive justice, by being paid fairly and equitably, solely on the basis of inputs of the employees. The employees are given recognition, responsibility and opportunities for personal growth to increase the level of satisfaction. Besides, healthy working conditions, good interpersonal relationships and flexible policies contribute to decreasing the levels of dissatisfaction among the employees, present due to low compensations and benefits. The jobs are highly enriched, have high degrees of skill variety, task significance, and autonomy, and the supervisors regularly provide feedback to the employees. This leads to the critical psychological states of experienced meaningfulness of the work, experienced responsibility for the work, and knowledge of the actual results of the work activities among employees, thus increasing their motivation, satisfaction and performance. COMMUNICATION There are no barriers to communication within departments in Ferguson Associates. The director of each department is personally involved with all his employees and has an open-door policy. The employees can go up to him and discuss their problems or suggestions with him any time. If a team is on a fieldwork, the team leader communicates with the director on the telephone twice a week, or if
- 8. need be more. The employees have no interpersonal barriers and are constantly involved in healthy, informal communication and social relationships. Besides, inter-team communication also takes place when the employees come to Ferguson once every week for administrative work (the employees working on an assignment spend the rest of the week at the client’s office). However, the interdepartmental communication is lacking, probably due to intense competition among departments. The interaction among the directors takes place once every month during the meeting of the board. Most of the upward, downward, and horizontal communication is informal and verbal, to avoid any misperceptions and hurdles that may be faced during information sharing. Besides, it also ensures immediate action, and immediate feedback, and consumes less time. Only the increment letters that are distributed once every year, or the circulars announcing holidays are written. Besides, a monthly newsletter published by Price Waterhouse Coopers is also distributed among all the employees to keep them up to date with the latest information on the products and policies of PWC. For external communication, that is, with the clients, again, all methods of interactive coordination are utilised. The communication takes place either face-to-face, or via telephone. The leaders also follow the policy of MBWA (Management By Wandering Around), to receive first- hand information about the employees. There is a common hall to all the consultants of each department, which not only facilitates this practice, but also prevents any barriers of communication among employees. The team communication structures are decentralised, and team members freely communicate with each other and arrive at decisions together. Since the information is shared with the employees, and they have a full-time access to the director, the grapevine is not strong and rumors are rare. However, sometimes, rumors about the activities of the clients do arise among the team working with that client. CORPORATE CULTURE The directors of Ferguson Associates keep emphasising the culture of the organisation, which has formal and documented values that are communicated to all the employees. To ensure alignment with these values, the directors act as role models, and closely administer and review their consultants. CORE VALUES: The values of Ferguson Associates can be divided into: THE BUSINESS ETHICS: The company follows two important business principles and adheres to them very strictly. These are: Independence of Judgement and Advice – the services and consultancy provided by the company to its clients is free of personal or organisational biases and prejudice. Confidentiality – the most important principle for the organisation is that it ensures that the information provided by its clients is kept completely confidential. THE FOUNDATION ATTRIBUTES: These are the values that the company follows in order to remain competitive, and to satisfy its customers. They are essential for the very existence of this organisation. They are: Professionalism – to maintain consistently high standards, to attend to details, to always give full attention. Value for Money – to competitively price the services, to ensure that clients get more value in return for the money paid as consultancy fees. Clear Communication – to clearly state the things by translating technical points into language that is understood. Quality & Excellence – to remain committed to excellence, to hire top-notch people, to provide them with excellent training. Easy Access & Approach – to be available when needed, to be responsive when called. Positive Relationships – to establish strong personal relationships, by working closely with the client. Local Presence – to understand the national culture, and to reflect it in the dealings with the clients. Excellent Reputation – to provide quality that is sought by world class companies. Well-known – to establish a well-known and instantly recognisable name for the company. Broad Range of Services – to have a number of services. LEVERAGE ATTRIBUTES: These are the values that the company strongly adheres to, in order to have a strong competitive advantage; they separate the company by labelling it as outstanding against the merely competent.
- 9. These values are: Fully Shared Knowledge – to have great knowledge, and a broad, deep business perspective, to share the secrets of success with the clients. Proactive Recommendations – to anticipate the needs of the customer rather than being just reactive. Co-ordinated Services – to bring all resources to bear on the problems of the business. Respect for the Corporate Culture – to accept, respect, appreciate, and adhere to the corporate culture. THE SLOGAN: The slogan is another important feature of the corporate culture of Ferguson. It communicates the emphasis on quality and creativity to both its employees and clients. The slogan is: “Join us. Together we can change the world.” CORE MANAGEMENT CONTROL SYSTEM FINANCIAL CONTROL SYSTEM: The most important control system that is used in Ferguson Associates is the financial forecast that projects the company revenues on an annual basis during the meeting of the board of directors. The top management then uses financial analyses of selected ratios to reveal subsequent business performance, and internal audits to evaluate the operations. The directors thus identify areas out of control and take corrective measures. Ferguson Associates also uses separate financial controls for each department. This includes the financial forecast carried out by each director for his particular department and the subsequent monitoring and corrective actions. These are based on the cash budgets also made by the directors to estimate the flow of cash into their departments on a monthly basis. The approach used is the activity- based costing and the directors estimate the costs by anticipating and identifying the various activities needed to produce the services and then determining the cost of those activities. These forecasts and budgets are strictly adhered to, and hence, provide an effective tool of controlling the resources and operations of the organisation. All the financial information is kept confidential from the consultants, and they are not involved in the budget and forecast control systems. However, they are aware of the fees charged for the assignments they work on, since it is finalised after thorough discussions with them. TIME SHEETS: Each consultant is required to maintain a time sheet for keeping the record of the time spent at the client’s office. It is reviewed weekly and the fee is charged accordingly. The directors normally believe the information provided by the consultants with respect to these time sheets. However, it is double- checked since the director keeps a constant contact with his consultants that ensures him of the time spent by them at the clients. QUALITY CONTROL The directors of Ferguson Associates use systematic processes through which they regulate organisational activities to make them consistent with expectations established in plans, targets, and standards of performance. The control of quality is ensured through close supervision at the higher level. Since the control system is flexible and timely, it is accepted by the employees, and hence, is quite effective. STEPS IN THE CONTROL PROCESS: To exert effective control, the top level has integrated quality control with the mission statement and strategic planning ideas. The standards of performance are established through the operational goals for the employees on a project or assignment basis. These depend upon the final proposal approved by the client and the director after discussions with the consultants themselves. Then the directors, through observation and supervision, determine the actual performance of the employees. This is followed by an explicit comparison between the standards of performance established and the actual performance observed. If the actual performance falls below the desired one, the directors hold discussions with the consultants to find out the root cause, and also to agree upon the corrective actions to be taken. ORGANISATIONAL CONTROL FOCUS: The type of organisational control is concurrent and the directors monitor ongoing employee activities to ensure their consistency with established standards. The main focus is on human resources, and the directors ensure that they get the right training and fully understand the strict ethical values of the
- 10. organisation. The director is personally involved in these activities in order to produce the correct results, with regard to each assignment. This is because the director personally signs every assignment taken up by his department and hence, is responsible for every single word of it. This is why each director makes sure that the employees are strictly adhering to the firm’s policy of “under-promising and over-delivering”. This stringent control has also lead to the firm’s image as certifying only what is “100% right”. Due to this Ferguson is enjoying an excellent reputation and a positive corporate image since this approach is the right one for most service organisations. CONTROL APPROACH TO QUALITY: The quality control approach used by Ferguson is the decentralised control approach, which includes the use of social values, traditions, common beliefs, and trust to generate compliance with organisational goals. CORPORATE CULTURE: Ferguson Associates has a strong cultural with its values embedded in its mission statement and corporate objectives as well as in the day-to-day operations. The consistency of the values with the organisational goals makes the corporate culture a powerful control device. PEER GROUP: The teams that work on projects are cohesive due to the informal nature of the organisation and the small number of employees in each department. This cohesiveness leads to peer control that pressurises the team members to adhere to the team norms and departmental goals. SELF-CONTROL: The self-discipline and self-control of the employees makes them keep performing their tasks up to standard. This stems not only due to the fact that they are aware of the close supervision of the directors, but also due to the intrinsic motivation, satisfaction, and commitment generated among the employees by the highly challenging, nonroutine and unique nature of their jobs, procedural and distributive justice, and laid-back culture. It is also due to the sense of responsibility and pride developed among the employees due to high degree of empowerment in their activities and decision- making. EMPLOYEE SELECTION AND SOCIALISATION: The directors carefully select individuals who are not only competent for the job, but will also be able to fit in with the company’s culture. They are passed through a rigorous selection procedure, since they are interviewed and screened first by the consultants and later by the directors themselves. This selection process, particularly the involvement of the consultants, leads to the selection of individuals who buy into the company’s goals, values, and quality traditions, and hence develop internal standards of performance that allow for self-control. TOTAL QUALITY MANAGEMENT: Ferguson Associates has no formal focus on total quality management. It is only done through making the customers the first priority, through focusing on teamwork, and through the empowerment of the employees. Besides, continuous improvement techniques are also used by making sure that the quality delivered on each assignment is better than the one delivered on the previous one. SUGGESTIONS FOR IMPROVEMENT The consultants should be involved in the operational goal-setting and planning process to generate greater understanding and acceptance among them. The budgets should be prepared for the whole organisation rather than preparing them individually for each department to ensure better coordination across divisions. The employees should be paid more competitively to enable the company to attract and retain the best workforce. The company should also offer long-term rewards to employees to retain them for longer periods of time. otherwise, the company can require the employees to sign long-term employment contracts with the firms after they are hired. The ratings on the performance appraisal forms should be shown to the employees to further ensure them about the absolute and objective fairness. The employees should also be asked to rate and appraise their directors in order to point out aspects where the directors could improve. The company should develop formal training programs for the consultants to keep them up-to-date with the latest trends, concepts, and technological advancements. The social gatherings involving the employees of all the departments should be held more frequently to further improve the quality of collaboration and coordination among them.
- 11. The directors should follow an open-book policy and share all the information regarding the company and its profitability to generate even higher satisfaction and commitment. CONCLUSION On a concluding note, the SWOT analysis of Ferguson Associates is presented below: STRENGTHS: The major strength of Ferguson Associates is the excellent reputation it enjoys that stems from the fact that it is a long-established firm that has been providing quality services throughout Pakistan for more than three decades. It is the biggest firm of its kind in Pakistan, and is also associated with the top most accounting firm, Price Waterhouse Coopers. These factors have lead to a huge clientele for Ferguson comprising of MNCs and large Pakistani firms. These strengths have also given this firm a major competitive advantage. WEAKNESSES: The main weakness of Ferguson Associates is its inability to retain its employees for long periods of time. Besides, the coordination and communication across departments is also poor due to the competitive element present among them. Not only that, but the company has the highest fee rates in the industry that is responsible for the loss of assignments of firms that fail to appreciate quality. Another weakness that leads to the loss of assignments offered by the large Pakistani organisations is the company’s strict adherence to ethical standards, due to which it does not accept the projects of the corrupt government organisations. OPPORTUNITIES: Most of the companies in Pakistan still lack computerisation and are following old systems and methods of doing business. Ferguson Associates excels in Computer Package Implementation and Business Process Reengineering that have enhanced their client base to include the organisations that are now moving towards computerisation and restructuring. THREATS: The only major threat faced by Ferguson Associates is from the growing number of competitors. These competitors are now emerging in the industry and are being successful due to the fact that they provide Management Consultancy Services at a much lower rate, and hence, the companies that fail to appreciate quality are attracted towards them. Hence, Ferguson Associates should build upon its strengths and the opportunities provided by the external environment while also working at the elimination of its weakness to fight off competition and maintain its success run for a long time to come.