Handling the Job Upgradation (From Supervisor to Manager, ) in the same Company,Motivating Subordinates and Sparking more to Perform Better from Talent Pool of Employee, Theory of Equity, Motivation Theory (Performance for Management Strategy)

As a manager, my first priority will be to understand the circumstance for declining performance of the team which could be aligned with the motivational dimension; here the situation could be easily reconciled with the equity theory of motivation, since it is vivid that due to low-performance appraisal mechanism employee with higher skills often perform below their standard, helping the passive one to get the rewards which they should not be entitled of.  As the human nature, this discrepancy of input to output relative to other could be detrimental which I feel is the contemporary issue in the company(hypothetical company with low employee morale). Similarly, even if we review the scenario under Job Characteristic Mode (JCM), we can infer the job may be lacking a motivational dimension like skill variety, task identity, task significance et cetera.

Each individual is unique in their own way and as defined by (Baldwin, Bommer, & Rubin, 2013), the performance of an individual is equivalent to multiplication of Motivation, Ability, and Opportunity (M*A*O)...EQ. (i) and as governed by equity theory of motivation, the motivating force for any individual is the factor if Expectancy, Instrumentality, and Valence (E*I*V)...EQ.(ii).Having known with this, my first step will be analyzing each employee individually, it will help to understand the "Equity Sensitivity” of individuals so that I can customize the benefit as extrinsic or intrinsic. For those who score high, financial benefits, status, perks, and incentives will be lauded whereas those who score low will be valued higher in the organization with distinctive recognition.

Let's analyze the current scenario of sales representative through the above-mentioned equation (i), the employees performing below the expected level has the lower level of motivation and these could be due to their lack of ability on one hand whereas they might be missing the opportunity to thrive due to the passiveness of the previous manager(management) also. Similarly, those qualified may have motivation and ability but may also lack the opportunity to thrive. So, as well said, the success and the failure of the employee and organization is in the hand of manager, it is unequivocally imperative that manager should be smart and intelligent with higher level of emotional intelligence.

It is equally important that the motive or inducement has to be created in the employee so that they can experience; explicitly or impliedly the valence or the value of their deeds. So, I as a manager will be playing a critical role in linking the two states of Eq. (i) and eq. (ii), aligning the value of the work to the employee as per their expectation so that win-win situation will be crafted in the organization as well as for employees. Instrumentalization should be done as per the ability of the workers.  For instance, some employees, as per Theory "X” are more shy and passive and needs constant guidance whereas as per Theory "Y” they are self- managed, has higher need for advancement and power (The Eonomist , 2008), for "X” category, the manager or I will be performing coaching and navigating role while for "Y”, I will incorporate interpreting role as aligned with the leader roles models stated by (Hawkins & Mothersbaugh, 2010).

Now, being specific to the strategies after completing the above scrutiny, I believe I have to revise, perform and learn from various implementations. After appraising the performance, their individual motives, their strength, commitments we could infer their inclination for affiliation, power or advancement, I will review the contemporary work and reward relationship; my focusing will be in creating a link between productivity and rewards through inclusion incentives, perks, recognition. Human resources are most effective and efficient resources capable to handle so its knowledge-based should be updated along with the recent trends in the market; I will be capitalizing on training and developments of staffs and managers. Similarly, a free and open communication is also a lifeline for positive motivation, periodical official meeting will be scheduled to know each employee state of wellbeing at the work. A manager can't conclude all work on his own, he has to trust and believe his employees so delegation and often is required decentralization of the work. Here benefits will be linked to the achievement of SMART goals which are constantly monitored and appropriate feedback mechanism will be in place so that they learn from their mistakes.

Definitely, I believe there could be some decision traps also, it could be from the managerial side or also from the employee dimensions. Sometimes managers often forget the importance of evidence-based decision making and go into the hasty generalization. He may negatively infer the actual problem and work on the periphery. Similarly, some time management sets a low level of goals to be achieved by the employee, these create the habit in employee to satiate in less which is against the "goal setting theory”.  And often due to the attraction towards incentives, inter-employee competition starts making employee myopic for own performance rather than focusing on organization goal.

A very precise caution has to be maintained will understanding the dynamic of organization since it's heterogeneous combination has its own uniqueness, each employee is different in their own way and it could be a challenge to change the aged run legacy. It has to be handled with care and caution because ethics and corporate governance also play unequivocally an important role in managerial decision making. And without any purpose, the manager may find himself in trouble due to his unethical approach of doing business as did my president Trump in his speech mentioning poor countries as "Shithole”.

Bibliography

Baldwin, T. T., Bommer, W. H., & Rubin, S. R. (2013). Managing Organizational Behavior: What Great Managers Know and Do. New York: McGraw-Hill.

Hawkins, D. I., & Mothersbaugh, D. L. (2010). Consumer Behavior: Building Marketing Strategy. Irwin: McGraw-Hill.

The Eonomist. (2008, October 6). Theories X and Y. Retrieved January 23, 2018, from www.economist.com: http://www.economist.com/node/12370445

Crowd-sourcing, Crowd-funding : A case of the “Threadless” and “ChallengePost” , System Theory, Brainstorming (Management Strategy for Performance)

In a simple layman view as said by Goodrich (2013) crowdsourcing is a management tactic to distribute the problem-solving mechanism since it is well verse that “the best way to have good ideas is to have lots of ideas.” In the process, the stakeholder outside the company also contributes to the success of the project, most of the time, creating a win-win situation for both, company as well as all the stakeholders. And the process actively operates in the online setting vide internet and social sites. Crowd-funding, Crowd-contests, and Micro-tasking are some examples of crowdsourcing.

Interestingly, “Threadless” and “ChallengePost” have also leveraged themselves via crowdsourcing.  “Threadless” which was initiated with $1000 seed money now worth’s multimillion-dollar, and all its success goes to the paradigm shift that it has incorporated in its product design. Rather than limiting itself in knowing its customers through the group of researchers and workaholic working in its company, it decentralized and delegated product design ultimately empowering its customers leading to “innovation” and “co-creation.”

Moreover, in the present scenario of cut-throat competition, the price-war among enterprises does not ensure its market stability, i.e., is a company X reduces its price by a unit of a dollar, company Y will also imitate the same or will come with even more tarnished marketing campaign availing second mover advantage. So, in the contemporary situation, the resilience of the company is also dependent on its internal environment, i.e., operational management. Hence, I feel that the success of “Threadless” was due to its divergent product design campaign and its ability to surrogate operational cost in aggressive researching by the economical process of community involvement thru the use of the internet. Its success came from valuing its customers, reviewing their product expectation and manufacturing the products which were already tested and proven in the market.

Both the companies have obtained competitive advantage in-compare to other traditional firms in the industry.  Let’s analyze the “Threadless,” and “ChallengePost” through Input-Process-Output mechanism vide below process flow diagram.

 Figure: Process Flow Diagram

Though all the firms and industry operates in the fundamental modality of using the resources from the environment, processing it and giving back to the community(as shown in above diagram in an open environment), the competitiveness lies in how they use the resources, process them and produce the final products. Here, both the companies, except their internal resources have also used the ideas of the consumer through crowdsourcing. They have created an open domain; consumer can come up with their expected T-Shirt design and in “ChallegePost,” an open solution is requested to the communities. Once the company obtains the ideas, they are tested(i.e., processed). “Threadless” reviews the rating of the design and finalize to manufacture only with the highest votes, similarly, “ChallengePost” reviews the participant’s ability to solve the problem. Ultimately, producing community desired and accepted products, services and even in at a low development cost. In both of the sampled companies, their outcome is not limited to the products and services but unequivocally generates immense satisfied customers, agile company, and foremost the reduced operations cost which in itself is a competitive advantage.

Hence both the companies have competitive as well as comparative advantage in the product redesign through i) high product success rate, since they are tested prior to the commercial launch and ii) lower research and product development cost, since they should not invest resources in new empirical researches iii) valued by their consumers and other stakeholders, since they also equally contribute to the product manufacturing process. But in contrast, the same kind of the firms in the industry, so-called traditional or orthodox either due to their higher resistance to change or lower receptivity to amalgamate are not able to re-engineer their process leading to their higher dependency on limited numbers of inter-organization staffs making the organization susceptible to closure. Nokia Inc., if had understood the expected trend of the market towards the Android platform would not have suffered the historical loss (Sull, 1999). Had they use any measures of crowdsourcing and incorporate market dimension, they would not have lost.

As mentioned above crowdsourcing is capitalizing on the knowledge, skills, and wisdom of the people those are beyond the boundaries of an organization. A perfect apotheosis could be Wikipedia.org, where the contents are contributed by the authors who are motivated to do so. As per (Kearns, 2015), multinational companies like McDonald's, Samsung, Lays and Airbnb has also incorporated crowdsourcing. In 2014, McDonalds Burger conducted the project where the customers could design the burger of their choice, latter burgers were voted by the country and designs with higher votes were on the stores to serve consumer taste buds along with the picture and short bio of the creator. So, the rudimentary logic is to reduce the chance of product failure by leveraging the resources effectively and efficiently the way market desires. Since the failure of the product is not only limited to the loss of the financial resources the company has but it’s unequivocally about the big question mark in the “brand image” leading to jeopardize its “brand equity.”

Equally, the crowdsourcing has limitations as well as drawbacks, if the participant happens to be ill-intent than the overall e-brainstorming process could be havoc. Some people may not be a good “netizen” and may not practice “netiquette”; online ethics. The feeders are not the employee of the company, so it is hard to control them. Moreover, as we know, the bad news transmit faster than the good ones, the vulnerabilities are higher in open platform. For example, if somebody with bad intent comment disturbing and distracting issues in “Threadless” or if a group deceptively ranks a design better than the actuality, the consequences could be detrimental.

Crowdsourcing has become a major source of startup, not only for its ability to develop ideas, raise debt or equity but unequivocally its capacity to diversify the risk and generate an enormous pool of ideas. As mentioned ahead, outsourcing could be for ideas or also for capital. For example, the project, “The Pebbe E-Paper Watch” raised $10,266K through Crowd-funding.

I fell that, Los-Angeles has the worst nightmare with public transportation, the public transportation is a real mess and takes hours even to complete some couples of miles, so I think now it is a time to come up with an idea of flying cars principally build on the modality of drones. Here, the promising ideas could be funded by the Angel Investors also. Similarly, the food sharing could be another burning example; most elites group in the society are throwing their food, fruits, and vegetables, in their home, office, restaurants et cetera. Whereas,  underprivileged and marginalized groups are starving for that food. If a common platform, i.e., a mobile application, notifying the excess hygienic food if is shared than it could be helpful to those who are in needs. Actually, it not only satiates others hunger but also save our precious environment through the effective use of raw materials. Just for a while think that you just shared the fries, excess milk that you were to dispose of in drain due to your travel abroad, uncooked fresh vegetables that were in your refrigerator since you were busy in meetings,  in the sharing application that could be useful for others rather than throwing them. In both of the cases, the general public could be appealed to come up which some promising concepts in an open portal. From the very beginning, these concepts of crowdsourcing or crowd-funding will help to generate ideas as well as a fund for the project and equally the aggressive promotion and word of mouth from the initiation.

An analogy could be clearly drawn between the crowdsourcing and business success through differentiation, cost reduction leading to innovation and co-creation. Similarly, the inevitable importance of the crowd participation for the success could not be denied. As done by “Threadless” and “ChallengePost”, the methodology could be practiced by every business entities as its benefits significantly outweigh the cost.

Bibliography

Goodrich, R. (2013, February 26). What is Crowdsourcing? Retrieved January 19, 2018, from www.businessnewsdaily.com: https://www.businessnewsdaily.com/4025-what-is-crowdsourcing.html

Kearns, K. (2015, October 07). 9 Great Examples of Crowdsourcing in the Age of Empowered Consumers. Retrieved January 19, 2018, from www.tweakyourbiz.com: http://tweakyourbiz.com/marketing/2015/07/10/9-great-examples-crowdsourcing-age-empowered-consumers/

Sull, D. N. (1999). Why do companies go bad. Harvard Business Review, 42-52.

US Based Manufacturer of Natural, Health Food Products Considering Growing Business in Chinese Market, Problem Solving, Case Study(Management Strategy for Performance)

Have you ever imagine the exchange rate between the USA dollar and Chines Yuan, do you know the process of registering international companies and way how you are to repatriate your profit back to the USA from China. The dimensional change in business proliferation from western to eastern hemisphere of the globe not only comes will an opportunity but the waves of risk are also unequivocally lingering. Beyond these economic variables other factors to name, like socio-cultural identifications, political philosophies, level of competition, and consumption pattern of households et cetera also impacts.

Hence cross-border business should not be limited to the expected size of the prospective market. As of 2016, China has a population of 1.379 billion and it does not guarantee that the natural health food product of USA wins Chines market. I personally believe it has to be an in-depth evidence-based procedure carried on the basis of research.

Hence firstly for me, it begins with understanding my own products. It involves rigorous analysis of ingredient, its usage, and consumption mechanism, I believe, it will help me to create the best fit between product varieties and target market as the usage patterns differs drastically between China and USA.

After being known with my own product, I intend to invest some time in stakeholder analysis.  These involve the group of people, communities who have direct or indirect influence on the products. These as mentioned above are the factors than arises from the external and internal environment. As stated by (Baldwin, Bommer, & Rubin, 2013) through Vroom and Yetton's stakeholder analysis, the scope of the impact of stakeholder could be incorporated in our product. It helps us to predict the reaction of related groups towards the product. A better approach here could be incorporating their views by leveraging them to provide their views on the products. I believe it helps our US manufactured product to get localized Chines inclination through product packaging, leveling, promotion, pricing et cetera.

Simultaneously, numerous researches will be executed, it supports evidence-based decision making, and these quantification helps to make our inferences precise.  As per (Wedellsborg, 2017) most of the managers switch to the solution mode rather than understanding the problem, these leads to create a condition of equifinality where the decision makers get stuck and are often ultimately bewildered by their own biases. The secondary research on the Chinese market could be extracted from the official websites like worldbank.com, imf.org, and Chines government website et cetera. It gives us birds eyes view on demographics, economic, social, cultural dimension of the economy and their affinity towards US products. Similarly, the annual report entitled "Doing Business 2017” published by Worldbank will help us to get the overall ease of doing business in China.

Similarly, the questionnaire could be designed to get expected feedback from the customers and analyze competitor's reaction towards the product. These help us to grab the real field scenario and possible competitiveness of our product or repulsiveness from the Chinese market. These questionnaires will be administered along with secondary analysis. The combination of primary and secondary analysis helps us to generate holistic views. 

Let's assume the scenario where we concluded from our evidences that Chines youth aged 20-30 years were found to be using natural and herbal food products mostly, similarly Chinese government advocacy for the green environment is also supporting the health of its citizen and environmentalism, these factors support us. Now we begin to customize our marketing mix and design them as according to the view to penetrate the Chinese market. We can glamorize our product through appealing promotion, competitive pricing et cetera. But on the other hand, if the findings were not supportive, which also could be, it would be in our best interest to invest our resources in other countries.

To conclude, the decision of investing in China shall not be a decision based of homogeneous factors, it includes, as mentioned above, various heterogeneous variables that have to be taken care off, and with all logical, scientific and evidence-based practices the happening of the odd could definitely be reduced. 

Figure: Flowchart based on PADIL on making investment decision by US firm in China

Bibliography

Baldwin, T. T., Bommer, W. H., & Rubin, S. R. (2013). Managing Organizational Behavior: What Great Managers Know and Do. New York: McGraw-Hill.

Wedellsborg, T. (2017, February ). Are You Solving the Right Problems? Retrieved January 15, 2018, from www.hbr.org: https://hbr.org/2017/01/are-you-solving-the-right-problems

Finding the Reason for Reduced Customer Rating in Call Center (Case Study), Symptom Cause and Effect Relation, Evidence Base Decision, PADIL(Management Strategy for Performance)

As said by Albert Einstein, "If I were given one hour to save the planet, I would spend 59 minutes defining the problem and one minute resolving it” the same proverb goes in analogy with the case of declining customer rating for the call center. The reduction in the customer rating is the halfway of cause and effects, i.e. it is the effect or the result of customer's dissatisfaction those have already availed the service. So, cautious has to be maintained in misrepresentation between the symptoms, cause and effect relation.

As stated by (Wedellsborg, 2017), managers switch quickly to the solution mode rather than checking to understand the real problem, this tendency could jeopardize the scenario making the manager work for wrong problem leading to collapse the scared resources. To being with I personally think, as stated above, enough time should be devoted to carry root cause analysis. Here the cause of customer un-satisfaction ultimately has bubbled as the problem for the service provider.

So, at first, I like to go deeper to understand the stakeholders and factors included in the process, i.e. clients, call service representative, a technology we are using to serve the client, competitors and the management. Now, upon analyzing and isolating each stakeholder through evidence-based management, previous researches, and analytical intuitions we can conclude that the point of contact between the client and company happens only during the service transmission through our contemporary technology that is being used.

Other stakeholders like management plays a back-end role. So, at first, it could be concluded that the call representatives provides the pivotal role in customer satisfaction. His/her attributes like the clarity of voice, level of empathy in learning customer's issue, knowledge of products and services matters a lot. The customer satisfaction could be upgraded by bringing professionalism in the call representatives.

But interesting as put forth by (Baldwin, Bommer, & Rubin, 2013), in the system approach of problem analysis where critical emphasis is given to understand "the iceberg above and below the water surface", the analogy could be drawn in our case too. The hidden factor that may not directly contribute and has subdued implication in performance like management philosophy, competitors, representative motivation level has to be analyzed.

As mentioned above the search would be fundamentally based on evidence-based decision making, and will follow the PADIL approach. The information search will be based on two fundament methods, i.e. primary and secondary. The primary methods will be through digital questioners to share customer experience where they will be asked to rate their experience with and behavior of call representatives and secondary research will focus on evidencing the previous data on the subject matter conducted by other firms in the industry. For the latter one, I will use the finding of other service centers. Once the problem along with stakeholder and their implication is defined, it will make our work easier to concretize in the issue, i.e. is it due to the employee or due to technology or due to competitors et cetera.

Hence, having done with the stakeholder analysis (within and out of organization), expected reason of performance deviation (due to employee or industry turbulence), other things remaining constant, if the impact is due to our own weakness, like poor technology, lack of motivated representatives, lack of training, I will recommend various intrinsic as well as extrinsic packages on the basis of individual performances. It could be free family dinner coupons(extrinsic) or circulating employee of the month award(intrinsic). Whereas, for the technical portion if they are outdated than new advanced technologies will be emulated so it can come across customer's expectation.

Here, as mentioned above the problem could be limited only up to employee or it could be due to other market turbulence. The above mention alternatives like a reward system, training, technologies advancement require resources in terms of money, time and energy. So, I will concisely work on it. Brainstorming and Brainwriting will be organized so that further details could be collected and will try my best not to commit hasty generalizations. The flowchart of problem-solving for the scenario is detailed below:-

Figure: Flowchart for the problem analysis and solving 

The success of decision making and problem-solving happens only after the verification of the actual outcome and if scientific, logical and analytical steps are incorporated the chances of success increases.

Bibliography

Baldwin, T. T., Bommer, W. H., & Rubin, S. R. (2013). Managing Organizational Behavior: What Great Managers Know and Do. New York: McGraw-Hill.

Wedellsborg, T. (2017, February). Are You Solving the Right Problems? Retrieved January 15, 2018, from www.hbr.org: https://hbr.org/2017/01/are-you-solving-the-right-problems

Importance of Self-Management and Self -Awareness while Preparing for New Managerial Position(Management Strategy for Performance)

It is always well said that the ability of the manager to manage his employees depends upon his own personal ability of self-management. So it is my firm conviction that knowing myself is critically important before I desire to amalgamate myself to the new working scenario, but, I would also like to spend some time in understanding the corporate culture and organizational dynamism of my new premises so that I can be acquainted well. And I strongly believe that we all are uniquely geniuses in one or another way and have to value the individual difference that we have in.

My self-assessment, as stated by (McLeod, 2016) about Bandura social learning theory starts after my careful observation of the environment (my new organization), demographics of employee (internal variable) and my study of their actual behavior to various stimuli currently prevailing and their future prospective behavior implication. From this observation, I believe it will help me to extrapolate or predict the trajectory of the behavior of my new employees.

I truly value the human capital of the organization, the most important and equipped one to maneuver and control other resources, i.e. financial, informational, physical et cetera. So I will convey them that I am a manager who focuses more on the human interpersonal dynamics and desires to practice and apply the participatory mode of decision making, free and fair of any biases and prejudices.

As stated by (Baldwin, Bommer, & Rubin, 2013), the self-awareness  will help to improve my self-management skills, for the purpose, observation and experimentation will help to harness my goals and will motive me ultimately enhance my managerial performances leveraging my conceptual, technical and interpersonal skills

Rather than intuition and my experiences, my values for cognitive skills are higher as I believe cognitions are based on evidence, and a well-framed decision making with logical steps has higher chances of succeeding a problem (structured or unstructured).  Similarly, I will be there helping the employee through my coaching, nurturing, guiding and navigating skills. As a manager I had hardly practiced the harder approach of management since I strongly advocate for deeper understanding of emotions and human interpersonal skills, I definitely believe that these will help employees to relax their views on management and their approach.  There could be the difference within the personal cultural which may impact the corporate culture, my values for cultural differences will always be high but equal caution has to be maintained as cross-cultural etiquettes often could carry multiple and misleading meanings.

Personally and professionally, I am always down to earth with open doors for suggestions; I always prefer collectivism over individualism and believe that manger success is utterly dependent on the success of employees. I will make them clear on the very first day that overall management strategies will focus on creating the win-win situation through the effective and productive use of scared resources.

My, as well as the wellbeing of the overall employee, depends on our ability to have SMART goals, so I will be constantly scanning the environment to strategize and re-strategize my strategic, business and operational goals and for this, unequivocally employee skills and knowledge up-gradation is paramount. So, for the purpose, I will focus on various training and management development programs.

To sum up, I will introduce myself to them as a friendly manager who is gregarious, altruist, cooperative, has high self-esteem, self -efficacy, and self- discipline but equally self -aware. Through my previous experiences, knowledge, and skills I think this will motivate my employees not only to work for me but also to work with me. As mentioned earlier, human capital is the most critical and important as it has the ability to control other precious resources. I believe my prioritization for scientific human approach focusing on evidence-based management will help to scintillate my positivity and motivate my employees.

Bibliography

Baldwin, T. T., Bommer, W. H., & Rubin, S. R. (2013). Managing Organizational Behavior: What Great Managers Know and Do. New York: McGraw-Hill.

McLeod, S. (2016). Bandura - Social Learning Theory. Retrieved January 11, 2018, from www.simplypsychology.org: https://www.simplypsychology.org/bandura.html

Evidence-Based Management and Decision Making and Reason for Leader Reluctance for it.(Management Strategy for Performance)

Yes, often it is seen that most of today’s management decisions are not based on evidence, firstly, they seemed to be guided by sensationalism, guts feeling and, intuitions (Baldwin, Bommer, & Rubin, 2013) which I think is the halfway truth towards actuality. Except this psychological variable which propagates a false sense of self-gratification in decision maker, the company is also constrained by lack of evidence due to their inadequate knowledge about the subject matter, i.e., how to gather the data and perform the research. Whereas the evidence-based decision making is a logical, systematic, scientific and analytical way of data collection and inferences which require resources in terms of money, knowledge, and skills but sadly all the business entities or the decision makers might not afford it.

As per (Baldwin, Bommer, & Rubin, 2013), the evidence-based management decision could be practiced and calibrated into individual and organizational well-being through detailed and in-depth analysis of circumstances and situations, i.e. through cause and relation analysis, had companies like Nokia Inc. and Kodak Inc. understood the  issue of decreasing demand for their products(profit) were due to  consumer inclination towards android platform and  market demand for photo digitalization respectively, they would not have failed (Sull, 1999). Similarly, no process holds the best approach; it depends upon the situation and decision should be contingent on various internal and external environmental factors.

Further, knowledge management helps to create a pool of data which could be retrieved for future assistance supporting to validate the evidence. And unequivocally, the organization and managers determination of practicing evidence-based decision making and researches through training, seminars, on and off the job learning and benchmarking from other well-doing organization could be an asset.

The applicability of evidence-based management is also crucially important; understanding of organizational behavior and business environment analysis supports the accumulation of the raw data which we can find from internal and external environments for decision making. As opted by (Baldwin, Bommer, & Rubin, 2013) these evidences can be collected through well modeled and planned process called “Big E Evidence” and often could also be within the organization periphery gathered through mundane and straightforward process. Depending upon the situation, problems, its impact, and risk associated the manager chooses the ways of collecting evidences.

The imposition of the findings and outcome of the evidence-based decision making depends upon circumstances, i.e., is the company going through structured or unstructured problems, is the phenomenon happening in an organization programmed or are they completely new? The best approach is always to being with self-audit, it helps the manager to be vivid of his own strength and weakness, and it helps him to be self-aware of himself. It is really important that he should erase his biases and predisposition that he has acquired previously from his learning. Further, the manager extracts phenomenal cues and understanding from the mutual interaction of person, environment and the business as advocated by the “social learning theory”

Having fair presence and research-based evidences, the manager, after identifying the scenario opt to set the goal, which should be SMART, i.e. specific, measurable, attainable, reliable and time-bound. He then allocates the resources the organization has in the best optimum and efficient way, he links result with rewards which mostly persuades and motivates the employees evolving to effective learning by doing organizational culture.

Pfeffer and Robert (2005) in their research entitled “Evidence-Based management” published in Harvard Business Review has also focused on the importance of evidence-based management, it not only provides the decision maker with required pool of data to make informed decisions but also revitalizes and creates a conducive, motivated working environment in an organization through an integrative and holistic approach . The evidence which proceeds from premises using and analyzing deeper knowledge, employing facts makes it more reliable but equal caution has to be maintained as these process could be situation specific and often it’s hard to create an analogy and replica of existing model as management scenarios could be unique in their own ways.

If we see the real business scenario, the companies like Amazon.com, Facebook.com are focused more on the evidences and scientific ways of making decisions and are outperforming than those following traditional procedure. It not only energies the strategic level of the company but also benefits overall hierarchy of the company through increased productivity.

For example, a recent hike in the general interest rate in the economy of the USA by Federal Reserve was an evidence-based decision to solve the macroeconomic turbulences; Federal Reserve was determined to increase the general inflation rate. Similarly, reduction in the corporate tax rate was also evidence-based management decision where the Republicans slashed the tax rate to create positive economic impacts. So, whether it is a small organization(private entity) or government(public institutions), the decision makers are always benefited by this scientific way of decision making but should be cautious as each situation are unique in their own way and often the analogy could be a fallacy.

The evidence-based decision making is a scientific, analytical, planned and logical step which has higher chances of rewards in compare to intuitions and guts feelings. And could be practiced and learned well by the managers creating a paradigm shift in management undertakings.

Bibliography

Baldwin, T. T., Bommer, W. H., & Rubin, S. R. (2013). Managing Organizational Behavior: What Great Managers Know and Do. New York: McGraw-Hill.

Sull, D. N. (1999). Why good companies go bad. Harvard Business Review, 42-52

EU debt crises: "An In-depth Study of its Impact in PIIGS” Incorporating Sovereign Debt, Trade Deficit, Social Expenditure, Balance of Payment,Austerity Measures

The inception of OECD goes back to 1948 when the countries came together for better integration of economies ravaged by the war. The organization founded on the principle of co-operation comprises major nations of Europe along with developed countries like USA, Japan and developing countries like India and China (OECD, 2017).

An analogy, if we preview back to see the economic trade cycles in the global arena, undisputedly we can infer, the global economy has a cycle, after every destruction, there was construction, after every recession, there was a boom. If left unmanaged than after every boom there was a bubble. A bubble is a proliferation in values of resources (oil or asset or derivative products) which often is projected high or subjugated less by laissez-faire market to the point which compels a market to crash. Perfect apotheosis could be a great depression 1930, OPEC oil price crises, sub-prime mortgage crisis of USA 2008 and EU debt crises 2008 which created a global economic, social-political and cultural turmoil in the history of the world and had given a fundamental economic doctrine to the humanity.

The paper herein will focus on conceptualizing the causes and implication of EU debt crises underpinning the factors like public debt, budget deficit, government social expenditure, exchange rate and its implication in global trade competitiveness. Let’s retrospect European Union (EU) from 1999 the year when Greece, a so-called lucrative global investment platform for many countries was enlisted as a member of EU.  The cluster of debt-ridden and burdening budget deficits countries; Portugal, Ireland, Italy, Greece, and Spain initially celebrated under the canopy of countries like Germany and France where they enjoyed low-cost borrowing but unfortunately the generosity of these pro-socialist countries with their implied self-interest approach (Appleyard & Field, 2014)  created a financial imbalance as the use of debt went into unproductive sector or for the settlement of recurring expenses of the country

The three main reasons as summarized by (European Commission, 2009), i. Upward pressure on European exchange rates with the US dollar ii. Carry trades which disharmonized the global liquidity in the European financial markets; investors borrowed currencies with low-interest rates and invest them in higher return yielding currencies and iii. The large capital flows made viable by the integration of the global financial market which was unfortunately invested in the unproductive sectors of the economy like real estate which created a global economic negative repercussion.

The countries were identically different in terms of their socio-cultural dimensions. Germany, on the one hand, was precise when it came about its financial obligation whereas PIIGS seems to be procrastinating. The convergence of multi-variability of various countries into single monetary mechanism was also a reason for the failure, PIIGS already overrode the Maastricht accord and other major players of EU like Germany and France had already crossed the threshold of public debt and budget deficit by 60% and 3% respectively (Steiner, 2012)

The aggressive lending by the US banks and financial institutions, where the original loans were securitized and distributed to other institutions created  leniency in determining the creditworthiness of the initial borrower, creation of the new convoluted financial derivative markets, overutilization of the capital by the banks, high leveraged, weak supervision in the off-balance sheet activities all ignited and fuel the creation of the subprime housing effects in the USA  and collapse of so-called “too big to fall” banks  like Lehman and Brothers in the US cascading global financial turmoil which soon penetrated into the  EU countries which were financially linked to the  US financial markets.

The non-reciprocity for less developed countries where the euphoria of low-cost borrowing that created a fiscal imbalance could also be seen as the laid foundation for the EU debt crises. The event synchronization could be depicted as in the figure below.

Source: www.bankrate.com, (Steiner, 2012)

Economic crisis never happens at once as an unexpected nightmare, the failure of the economy is a catastrophe brought by series of symptoms that are manifested by ineffective policies and practices. The same happened in PIIGS, the budget deficit to GDP ratio of these countries had already breached the level required by Maastricht Accord, as shown in the graph below

 Source: www. economics.rabobank.com.

Each year budget is allocated by the government of the country to come across its current and capital expenses. These gaps, either be a deficit or surplus has an impact on the way government forms its taxation and spending policies and directly or indirectly impacts various economic parameters like inflation, foreign exchange rate, interest rate et cetera.

Globalization and liberalization have not only opened the borders for free trade and cooperation between the countries, but these also been a mechanism for the flow of contagious financial crisis as we can see the impact of subprime housing effect of the US that reached to EU countries as investments were made across the countries.

In general, the portion of deficit budget of the overall OECD countries was on the rise, except for some limited countries in EU, the deficit was alarming. As mentioned above about the Maastricht Criteria in 1993, it was made compulsory to limit the government deficit and debt to 3% and 60% of the GDP respectively(Ismet & Mehmet, 2012). To put in the layman views, high public spending but in contrast decreasing public revenue is also the reason for the collapse of PIIGS.

Table: 1, Government Budget Deficit, 2008(Source: OECD Factbook 2014)\

Admits populism and intent to be voted back, Greece government opted for unaffordable pensions for the country which was amalgamated with falling tax collections; ultimately raising the deficit in the budget (Buckley, 2015). This self-interest approach (Appleyard & Field, 2014) of the political alignment though temporary glamorized Greece but jeopardize it in long run. PIIGS are the neo-socialist where they unfavorably pressured the private sector to bear the burden of public initiatives.

In an event of gloomy economic failure, the budget deficit was followed by the high amount of public debt. The economic crises in PIIGS were so deeply embedded that the crises started to proliferate at various sectors of the economy. The countries in PIIGS were already losing their government revenues, Spain and Ireland lost them in the form of property tax brought by the asset bubble which was one or other way around affected by US sub-prime housing effect and Greece by higher cost of borrowing which was twice the rate being enjoyed by Germany. The bubbling sovereign debt was to burst with significant microeconomic ripples. Due to higher debt and deficit, the cost of doing business increased exponentially in PIIGS in compare to other stronger economics leading to crowd out the private investment which significantly reduced the government tax revenues impacting their fiscal balance. The higher tax, heavy regulations, and globalization were the force to induce producers to outsource resources from other developing countries or go into China, drastically reducing the export of the country. The line graph below provides us some insight on increasing borrowing cost for PIGS.

Source: www. economics.rabobank.com

Interestingly,  if we analyze from table 1 and 2, the percentage of the budget deficit and public debt for countries like France, Germany, Norway, and Finland were relatively lower increasing their reliability in the eyes of investor and ultimately with low cost of borrowings.

Table:2, Government Debt, 2008 (Source: OECD Factbook 2014)

As per IMF study, a percentage rise in the global debt/GDP ratio escalates the long-term interest rate by 0.1. The debt ratio of the PIIGS and most of the EU countries were on the rise, pushed the real interest upwards leading to crowd out private investment and rise in unemployment rate. (Davies, 1995)

Source: www. economics.rabobank.com

The soaring debt of PIIGS exponentially raised the tax rate which was to come across sovereign financial obligation, the recurring and repetitive debt requirement during the recessionary turmoil drastically raised the cost of borrowing. The increased demand for the debt also raises the cost of doing business within the nation and crowd out enterprises. In 2010 Athens planned to issue $75 billion bonds to come across its financial obligations. By 2010, Spain, Greece, Ireland, Portugal has the budget deficit of 11.1%, 15.4%, 14.4% and 9.3 % respectively and the debt of 53.2%,126.8%,65.5% 76.1% of GDP (The Telegraph, 2010). Greece public debt (177%) was highest among the EU countries which are followed by Italy (132) and Portugal (129) as per 2015 data provided by Eurostat.

Alarmingly five EU countries; i.e. United Kingdom, Italy, Germany, France, and Spain alone has a debt standing over €1trn (Wikipedia, 2017).

The balance of payment (BOP), on the other hand, is also a prime indicator in depicting the financial health of the economy. Generally, other things remaining constant, a positive BOP refers higher exports in compare to the imports and it could be in goods as well as services, on the happening of this, countries with higher BOP holds more foreign exchange reserves making their economies stronger in the global trade platform. If we follow the OECD Factbook, PIIGS have negative BOP from 2007 onwards. Unfortunately, Greece only has continued with this in 2014 whereas Germany and Norway had maintained their positive BOP to date.

Figure: 1, Bar graph of BOP for year 2007, 2008 and 2014, (Source: OCED Factbook 2015)

From the above figure 1, we can see countries in PIIGS were underperforming since 2007 but with tightening regulatory measures from European Central Bank (ECB) and other stern monetary measures countries except for Greece in PIIGS has positive BOP from 2014 onwards manifesting a growth in intra-Eurozone trade.

Till the point, on inferring the economic and financial history of above mentioned EU countries we found, three economic parameters which also has direct implication in the international trade, i.e. budget deficit, public debt and balance of payment (BOP) were underperforming, the impact of which was higher cost of doing business leading to crowd out private investment (capital flight) and tax revenue for the governments along with other socio-cultural violence, leading to run the country into deficit and low public saving.

Similarly upon the analysis of the disposable income and saving in the same time among the above mentioned sampled countries it was observed that disposable income as well as saving as the percentage of disposable income was in decreasing trend for the countries under PIIGS which can also be seen from the table below.

  

Table: 3, Percentage increase in the disposable income, 2008 (Source: OCED Factbook 2015)

From the table 3, we can infer that the impact of the national economic crisis has been throughout the Eurozone, Greece has the greatest percentage of decline in disposable income in 2010 whereas France, Germany was able to maintain their economy

Table: 4, Percentage increase in the saving as a portion of disposable income, 2008 (Source: OECD Factbook 2015)

Similarly, the impact of low income can be seen in the private household saving in table 4. From the data of table 3 and 4, it can be concluded that not only the PIIGS were lacking in public saving (i.e. their budget deficit) but also were having lesser private saving, the impact was the supply of lesser loanable fund for the investment and lesser national output. The lesser output forced for higher imports but depreciated currency in the PIIGS leading to increase in the trade deficit even more. The household debt and non-profit institutions serving households as a percentage of net disposable income increased between 2007-2014, France and Germany, Greece recorded the largest

Interesting, a trend has been observed among the population growth rate and GDP growth rate in sampled countries. To put it another way, it could be concluded that the countries that were under-performing had higher population growth rate relative to the growth in GDP. And these could have a direct implication in their social expenditure.

Graph: 1, Comparison between GDP and population growth rates of sampled countries for 2008.

The developing countries of Asia, namely China and India were doing relatively better than countries under PIIGS and other Eurozone, probably as the developing models of those countries was focused more in internal consumption whereas the EU countries relied heavily on intra-Eurozone trading.

The social expenditure, the amount that the country spends to protect and promote the standard of living of marginalized and poor people of the country could be an additional financial and fiscal burden during the time of recession. These could be in the form of sick allowances, unemployment allowances, pension et cetera. These pro-socialist countries of PIIGS were in no mood to reduce the generosity they have been granting their citizens, the reason could be i. nationwide mass protest ii. government natures to be benevolent so that they can be re-elected back.

Graph: 2, percentage of social expenditure of sampled countries for year 2005,2009,2014, Source OCED Factbook 2015.

The social expenditures of all the sampled countries have increased throughout the observed period 2005, 2009 and 2014. The only difference was how the burden was born in the country. In case of most of the EU countries, they were assumed by the government itself which pressured their fiscal deficit grossly but some well-performing country were shifting these kinds of burden to the private sectors, releasing more funds for economic development and capital investment. The pension burden of PIIGS in 2008 ranges from 10-15% of their GDP whereas at the same period it was just 5.9% of GPD in the USA.

Sooner bailout was inevitable, in 2010 Athens planned to issue $75billions bonds to come across their financial obligations and Greece and Ireland was the first to be bailed out. The bailout came with the cost in the form of extreme and stern austerity measures shrinking the economy deeper. International Monetary Fund (IMF) reciprocated tightening fiscal balances, i.e. increased tax, social expenditure, wage cut, these created political and social havoc in already jeopardized economics, a massive protest came in streets against the austerity apparatus.

A pervasive euro currency did also create problems for countries in PIIGS as they lost the control over their monetary policies and its apparatus. A state of fixed exchange rate regime and un-autonomous monetary policy leads to decrease the output of economy (Appleyard & Field, 2014). As the countries like Greece, Italy, Portugal, Spain, Iceland, and Ireland started to have the trade deficit, the option left to them was to incline towards the lender of last resort; European Central Bank(ECB). These countries could neither depreciate their currency so that they make their export cheaper.

Ultimately it created a detrimental situation for the net importing country (due to trade deficit), they were spending the huge amount of their weak currency to import the goods and services. Had the government of the country been able to print their currency upon requirement or been able to devaluate or reevaluate their currency, to some extent crisis could have been managed. Interestingly, United Kingdom (UK) pulled it out from the same currency regime and protected itself whereas Greece currency appreciation and Germany devaluation during the joining into Eurozone make the export dearer for Greece whereas cheaper for Germany, a strong reason for current account surplus of Germany.

Whereas countries like France and Germany were doing satisfactory from the very beginning as well as were less harmed by the EU debt crisis relative to those in the PIIGS. From the OCED Factbook, it was seen that GDP growth rate was higher than population growth rate, savings were higher with higher income of public and BOP was positive in the countries that were found to be less devastated by EU debt crises. The same could be found in other sampled countries like South Korea, USA, Finland et cetera. The line graph depicting the current account surplus of Germany also provide us clear stance on disused points.

Source: www. economics.rabobank.com.

France focused on learning from others approach, i.e.it benchmarked with other soundly performing EU countries to reduce its ballooning public debt. It centralized public expenditure to control social expenditure and focused on the fiscal savings; prioritize maintenance rather than uncontrolled expansion of public spending. (Hallaert & Queyranne, 2016)

Having gone through the above-mentioned facts, figures, cases, and illustrations, can we now infer that the sovereign debt was the only possible cause for the turmoil in EU that propagated throughout the globe. Perhaps, economist and Nobel laureate Paul Krugman denies. In 2016 the amount of GDP to debt ratio of the USA and Japan was 106.1 and  250.40 respectively, has the case been so than these two countries should also have fallen into economic crises but Krugman says PIIGS were collapsed by the higher interest spread, i.e. higher cost of borrowing.

Graph: 3, Proportion of debt as the percentage of GDP for the USA and Japan

Due to the significant amount of risk perceived by the investors, PIIGS were paying up to around 30% as interest rate when Germany was just paying around 2-3 %. These higher costs of borrowing had an economy-wide shock that makes the PIGS, even more, worse off.

Nevertheless, debts are not bad either, many economies of the world are performing excellently well with their budget deficit which they had fulfilled by debt. The debt was utilized by the well-performing countries by investing in capital and social infrastructure whereas those in the PIIGS were used for the repayment of debt and its interest.

As per (Arkoh, 2013) government often takes debts so that it can use it to come across its capital expenses and uses the taxes for recurring expenses. Furthermore, the use of the debt prevents the economy from the inflationary pressure that could come due to the printing of new currencies. In 1988-1990 the increase in 1264% of money supply in Argentina created an inflation of 1912%. As per (Kenny, 2017), 2010, 2011 and 2012 were volatile EU periods as the country like Greece was too small to save whereas Italy and Spain, too big to be protected.

Whatever be the scenario then, now the circumstance has changed, slowly the PIIGS economy has started to recover after the imposition of strict austerity plans followed by the bailouts. And the EU debt crises could be termed as the financial turbulence occurred in the EU zone due to higher leverage in the utilization of debt by the country's, deteriorating monetary policy due to the loss of control in monetary policy and inflating trade deficit.

To conclude, the escalated  Debt and Budget deficit increased the cost of borrowing for the PIIGS, it makes doing work harder, private sectors were crowd out declining the government  tax revenue, meantime asset bubble in Ireland and Spain was impacted by US subprime mortgage crisis, due to negative BOP; trade deficit enlarged, stern austerity for refinancing hit the domestic economy hard and  controlled Monetary Policy by European Central Bank (ECB) but individualized Fiscal policies by the countries make the EU debt crises happen in 2008.

But for the mankind, EU debt crises will remain as an undisputed history of global macroeconomic shocks which was triggered by the euphoria of low-cost borrowing by EU countries into their unproductive sectors, where the regular citizens in that time had experienced inflation through depreciated currency, students and scholars might had practiced shifting and moving of IS and LM curve the way that increases the interest rate and had decreased the BOP and national output. And last but not least, these all events have focused on better integration within the EU with tightening regulation because if there were no measures from ECB, IMF and other stronger economies like Germany, France, it would have been hard for the countries in PIIGS to bounce back  

  

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