| Finance function tools and techniques in context |
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| Irish managers are faced with a near bewildering array of management tools and techniques. But to what extent are organisations using them in Ireland, how are they being used and are managers satisfied with the impact that they have made? John Cullen decided to find the answers. |
Over Spring and Summer 2002 the Centre for Management Research at the Irish Management Institute investigated the use of management tools and techniques across a range of organisations in Ireland. The study found that Irish managers are positively disposed towards management tools and techniques and believe that top management support, teamwork and communication are vital to their successful deployment. The most commonly used tools in our sample of Irish managers were (by function):
• Risk management (Finance);
• Strategic planning (Strategy);
• Customer relationship management (Marketing) ;
• Performance management (HRM); and
• Key performance indicators (Operations).
The Centre for Management Research ran a number of focus groups and obtained feedback on the structure and content of a pilot questionnaire which we had drafted based on our review of the literature, and the nature and usage of tools and techniques within participants’ organisations. From the literature review and focus groups a total of thirty-one tools and techniques emerged ( see Table 1).
The tools and techniques in the survey which received the highest overall average satisfaction ratings were key performance indicators annd supply chain integration.
Our survey revealed that the use of management tools and techniques is greater in multinationals than it is Irish organisations. On average, Irish organisations use 10 tools, while multinationals use 17. The most popular tool used by Irish organisations was strategic planning which was used by nearly three-quarters of respondents in that category. In multinationals, management by objectives and performance management are both used by 85 per cent of respondents.
Irish organisations were most satisfied with focus on core competencies, product lifecycle analysis and competency-based interviewing. Multinationals, on the other hand, were most satisfied with total quality management. Irish organisations were least satisfied with enterprise resource planning systems and multinationals with business excellence / EFQM.
We also compared the use of management tools and techniques in companies which were partially or fully unionised, to organisations which were not unionised. We found that tools and techniques usage was higher in unionised organisations; on average organisations with some level of unionisation utilised 15 tools and techniques, while non-unionised organisations used 12. We also found that the tools/techniques most used by unionised organisations were performance management, cross-functional teams and strategic planning; in non-unionised organisations key performance indicators were most used. Unionised companies were most satisfied with customer relationship management, focus on core competencies, employee share ownership plans, key performance indicators and supply chain integration; non-unionised companies were most satisfied with intranets.
We examined management tools and techniques that responding organisations had used in the past but had discontinued for a variety of reasons (see Table 1). Interestingly, feedback from our follow-up case interviews indicated that managers did not rule out revisiting previously discarded tools and techniques and saw that they might become more relevant as a result of organisational change.
Trying to make sense of the many options is difficult for companies, no matter where they are located. To start with, the term ‘management tools and techniques’ is extremely broad. It is generally accepted as covering concepts, processes, exercises and analytic frameworks. Some - such as benchmarking or cycle time reduction- have quantifiable outputs in the form of numerical data. Others - such as knowledge management, or cross-functional teams - are essentially qualitative. What is more, some end up as mere fads, frequently discredited as soon as they have become widely propagated.
Internationally, the experience is that implementation of new management tools and techniques can be expensive and the benefits derived not always obvious. Managers frequently have unrealistic expectations and at times these tools can place huge learning demands on organisations. Organisations have also learnt that very often for benefits to accrue the implementation of one tool or technique depends on the implementation of another. In reality, therefore, managers have to take responsibility for identifying the tools/techniques appropriate to their organisation and to tailoring them to meet their unique needs.
To do that, they have to know which ones are relevant for their own functional area as well as those which operate across and between functions.
Perhaps most crucially of all, we found that the key factors in the successful identification and adoption of appropriate tools and techniques is the organisation seeking to adopt the tool/technique itself, its reasons for choosing the tool and the level of support given by senior managers to the initiative. |
John Cullen is senior management researcher at the Centre for Management Research, Irish Management Institute.
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| Article appeared in the May 2003 issue.
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