A Report on the Operations of Lodestone Patient Care Business Challenges in the New Millennium
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This report deals with the functioning of Lodestone Patient Care, a company dealing in diagnostic imaging services in the UK.
The company, a fully owned subsidiary of DCA Group Ltd (Australia) and a part of the I Med network has now been operating for 15 years and provides its services to private customers as well as through a Private Public Partnership through the NHS.
The report deals with the operations of the company, with particular reference to he functioning of the finance department, in light of the vastly changed business environment of the new century.
The report examines the thinking of conventional and recent theories in management, particularly in areas of Performance and Change Management, and the demands of the new business environment, which necessitate fresh and out of the box thinking for business solutions.
The report attempts to apply these management theories and principles to the issues faced by Lodestone Patient Care and tries to provide practical and relevant solutions that would help the company cope with the dynamics of todays fast changing business environment.
Application of B700
Statement of Problem
Purpose of Study
Limitations of Study
Motivation and Performance
Current Theories in Management
Choice of Analytical Approach
Choice of Information Source
Data Findings and Analysis
Conclusion and Recommendations
1 - A Report on the Operations of Lodestone Patient Care Business Challenges in the New Millennium introduction. Introduction
The researcher, as part of academic requirement under the B700 procedure is required to submit a detailed report on the Management of Performance and Change with reference to the specific place of work.
The researcher is presently employed in the finance function of Lodestone Patient Care. Lodestone is a wholly owned subsidiary of DCA Group Ltd (Australia) and is an integral part of the world’s largest private diagnostic imaging group, the I-MED Network. The company was formed in 1991 and provides diagnostic imaging services across the UK to both the private and public healthcare sectors. The company operates 20 imaging centres providing services in MRI, CT, Ultrasound, PET/CT, General Radiology and Bone Densitometry.
Lodestone was the first private radiology company to enter into a Public Private Partnership with the NHS and developed their first standalone primary care based radiology centre offering multi modality, digital radiology services in Bradford.
The company, while being young in age has done well till now and has built its success primarily on the excellence of its service quality. The company’s merger wit I-MED has helped in revitalising practices and in motivating practices and support staff. Lodestone will be bidding for a number of National Health Service (NHS) outsourcing contracts, which, if successful, have the potential to double the size of Lodestone once contracts commence in late 2006.
The company has set a number of targets in the short and medium term, chief among which are the provision of outstanding service to the communities in which the company operates, the provision of good facilities and equipment, organize structures that enhance the partnership model and doctor leadership, rationalise the construction of remuneration packages that not only motivate but align personal and corporate goals and achieve a sustainable profit growth that can provide enough accruals to provide for reinvestment in equipment and facilities, incentivise staff to give their best and provide good returns to investors. The company this has initiated a wide ranging change process to increase its competitive edge through enhancement of service skills and capabilities,
The researcher’s employment is of recent origin but because of a Head Office appointment and that too, in the finance function, is able to have access to senior officials of the company and a good amount of information on its functioning.
Application of the B700 Perspective
The B700 method of study for working students is unique in its conception and makes great use of the synergies achievable in learning inputs received simultaneously from theoretical text, management thought and practical exposure to company operations. The focus of the B700 course is to “provide(s) managers with the tools and techniques they need to improve performance in their team, department, organisation or project. It brings cross-functional perspectives – from markets, operations, finance and accounting and people – to bear on complex management problems” and thus arrive at holistic solutions.
In the course of this assignment the researcher thus intends to investigate the various theories available to managers in areas of markets, personnel, motivation, operations and finance, including those included in the course and test their relevance and applicability to Lodestone Patient Care. Care will be taken to specifically assess the effect of decisions not only on the particular operational area relating to the decision but its ramifications in other operational areas to assess the overall effect of strategy changes and recommendations on the total organisation.
At the sake of being presumptuous the researcher intends to conduct the study from the perspective of a business leader to look at opportunities conducive to charting the organisations future course even while taking account of aspirations and ideas of individual staff members that can contribute towards this objective.
Statement of Problem
The researcher’s specific role in the organisation is in the finance department with specific responsibility for the following.
· Processing patient transactions correctly and efficiently
· Good cash collection and reduction in debtor days
· Ensuring correct and timely payment of operating staff
· Achieve high standards of customer service
The researcher, from his experience with the company feels that there appear to be a number of ways whereby the efficiency and efficacy of the department can be significantly improved.
An improvement in the working of the company will assist in significant improvement in its functioning and aligning it with that of the objectives of the company.
Purpose of study
The objective of this report is to investigate the working of the finance function of the company with specific reference to the existing problems and lacunae and in its approach towards marketing, sales and customers, personnel and HR, operations, partnering and doctor leadership.
In the course of investigation and research into the functioning of the company the researcher feels that it may be possible to locate a number of interesting findings that would help in bringing about relevant improvements, not just in the finance department but in the company as a whole.
The researcher proposes to use the inputs received from the B700 study regimen and wider management reading available elsewhere as well as primary information sources to collect data, analyze the findings and thereby arrive at conclusions and possible suggestions to improve the functioning of the company. It is hoped that the report will possibly make available fresh perspectives to the issues engaging the company and offer useful and practicable solutions.
Limitations of Study
The study is to a certain extent limited by the vastness of the canvas and the time available with the researcher for this assignment.
The researcher has not spent much time with the organization and being a relative newcomer possibly will have incomplete primary data required for the investigation. The suggestion of management solutions to a competent and successful organization staffed by competent, experienced, qualified and talented managers obviously requires detailed study and knowledge of the subject as well as correct application of management principles and techniques.
The issue has multiple perspectives, evidenced by the large number of theories that abound on the subject and the enormous literature available. It thus requires enormous perspicacity and a judicious use of literature and primary information sources to carry out a planned investigation on the subject.
However, while extremely sincere efforts have been made for the purpose of this study, the availability of more time in the organization would have possibly have led to more detail and enhanced the quality of analysis.
2. Literature Review
This research assignment makes substantial use of secondary material in the form of texts, journals and magazine articles as well as internet sources for purposes of data availability, analysis and investigation. Online libraries like Questia have also been liberally used. All sources used, cited in text or not have been arranged in the bibliography. The researcher prefers to take up topics for discussion sequentially and use inputs from a number of sources rather than deal with the sources and their authors separately for the sake of logical progression of ideas and cohesion of thought.
The business environment has never been as dynamic as it is today. Rapid developments, changes in marketing scenario, new product developments, a mix of work from office and home opportunities and flat organizations have compelled management thinkers to look at newer theories and given rise to scholars like Nigel Piercy of Warwick University and Josh Margolis of Harvard Business School whose theories go against conventional management thinking yet are very relevant in todays business scenario. This assignment tries to examine conventional management thought as well as the theories of new age thinkers in determining appropriate strategies for todays business scenario. Disruptive thinking is thought to be extremely relevant to todays innovative requirements and its absence cited as a major reason for languishing of the giants like IBM when it comes to the development of new products.
Performance in a business organization is possibly the subject of the most continuous and detailed scrutiny, quite explainable because the success of the organization depends largely upon the performance of ts managers and employees. Performance can be monitored, some experts feel by the use of the four E factors, i.e, in the achieving of effectiveness, efficiency, ethical behaviour and economical results by the employees of the organization.
The management of performance by an organization depends to a great extent on the performance of its employees and of great relevance. The term Performance Management has come to be widely used today by writers and management experts and is often confused with traditional appraisal concepts, which is quite inappropriate. Performance Management is a much broader term and is more akin to the creation of a work environment or setting which enables people to perform to the best of their abilities and realise their fullest potential. It is a comprehensive work system that commences as soon as job is defined as needed by the organization.
The issue is very closely linked to Job Satisfaction, Motivation in the workplace and the role of Job Characteristics. These have been the cause of intensive research for many years now and have given rise to many theories, formed on the basis of extended research by psychologists, social scientists and HRD managers.
These include the understanding of need hierarchies like Abraham Maslow’s theory of needs and Clayton Alderfer’s ERG theory of motivation, the thinking of Herzeberger and McClelland and the various theories of goal setting and motivational processes. A number of organizations base their HR practces upon an understanding of these various theories and their adaptation to the business environment. Another variable which has come to occupy a permanent factor in HR policy making is employee reaction to the comparatively new practice of having to spend a significant part of working time in front of laptops and computer screens, be it any job profile, such is the pervasiveness of Information Technology in all areas of corporate life.
In the UK the ocurrence of bullying in the workplace has been drawing the attention of corporate managements and sociologists for the last few years. It is today thought to be one of the main causes of stress in the workplace and results in a number of adverse effects upon the physical and mental well being of employees and is a perceived job characteristic in a number of workplaces.
Employee satisfaction is thought to be one of the primary requirements of a well run organization and considered an imperative by all corporate managements. The last five years of globalisation, the rise of the Chinese economy as the world’s cheapest manufacturing destination, the gradual pervasiveness of the internet and the emergence of outsourcing on a global scale have shaken up years of corporate practices in both manufacturing and service sectors of the economy.
We view job satisfaction as emerging from a variety of factors, including characteristics of the organizational environment, specific features of the job, and the personal characteristics of the worker. Higher job satisfaction has been linked with employees who are able to exercise autonomy (Sekaran 1989) and with those who have a higher level of job involvement (Mortimer and Lorence 1989). Women have been found to report significantly higher job satisfaction than men (Hull 1999; Sousa-Poza and Sousa-Poza 2000), although this gender gap appears to be narrowing (Rose 2005). Some researchers have noted that older workers tend to have a higher level of job satisfaction, although a number of studies have shown that the age variable might be more a proxy for experience (Janson and Martin 1982; Kalleberg and Loscocco 1983; Brush, Moch et al. 1987). Older workers also tend to be situated in higher-level positions, which might be more fulfilling than the less exciting entry-level positions of those just entering the work (Danziger and Dunkle, 2005)
The challenges faced by HR departments have accordingly increased manifold as businesses try to adjust and to and use the new economic realities to their advantage. In the UK the shift from manufacturing to service has resulted in the a huge change in the nature of skills required and available and the country has made rapid progress to becoming a high end service economy, home to top class skills in many service areas, notably finance, investments and banking. The shift in the nature of jobs has also led to a change in job characteristics and in the functional tools used for carrying out jobs.
It is an undeniable fact that the future of business enterprise depends upon the satisfaction level of its workforce. Dissatisfied workforces cause immediate problems only to their particular busineses. However, if these problems are left inadequately attended they have a tendency to spiral out to include other businesses, industries and regions harming relationships, productivity, profits and finally also the creation of national wealth.
Motivation and Performance
Human resource management objectives are concerned about implementing compensation methods. Hard methods drive employees to carry out strategy through sternly administered policies in comparison to those adopted by softer organizations where employees are nurtured as important assets, not commodities.
The answer lies in a skilful mixture of hard and soft policies, an amalgam of the theories of supply and demand and equal pay for equal work. The issue of employee motivation and reward for excellence in performance also plays a very important part in compensation methods. “To be effective, remuneration systems should be based on sound understanding of the motivation of people at work. However, this has proved to be an extremely complex topic, and very often reward systems used by employers have been based on simplistic motivation theories and they have failed” (Bowey, A.M., Pg 1) Theories of motivation are being studied for many years now and have been influenced by prevailing management ideologies and philosophies. There is now a growing body of thought, which indicate that motivation varies between individuals, groups and cultures and this affects the operation of a remuneration system. There are six distinct patterns of motivation, material rewards, status and prestige, security and social issues, job interest, variety and challenge and leadership. Research also shows that a host of job specific factors influence employees. These are pay, working hours, promotion opportunities, autonomy, working indoors, intrinsic features and worth of the work, interpersonal relationships with colleagues, and working conditions.
However, a very strong school of thought believes that money is the prime motivator in the workplace. Peter Drucker has gone on record to say, “there is not one shred of evidence for the alleged turning away from material rewards … Antimaterialism is a myth, no matter how much it is extolled”. (Employee Rewards, Pg 1) Obviously, we live in a world dominated by the need for money and any effort to build strong relationships with employees invariably rings hollow in the absence of satisfactory compensation. Efforts to build relationships work only in the presence of a satisfactory compensation system; when the reward is right good HR practices will give the extra impetus motivating the team to give its best.
Current Thinking in Management and Inter Organizational Relationships
Busiiness enterprises need to accept the fact that the world has changed vastly from what it was even a few years ago and the challenges that arise to the business environment are dynamic, evrchanging and morph continuously with each new development. The emergence of China as the world’s cheapest factory, the pervasiveness of the internet and the possibility of getting a number of equal skill services at the fraction of the cost from places like India and the Philippines. Business enterprises that can adapt to rapidly changing market conditions will be best positioned to prosper in the 21st century. The success of the enterprise will depend on the creation of innovative solutions to business problems and successful adaptation to the always changing business environment.
For the last many years, marketers have followed established marketing strategies for selling their products and services. Marketing, in its simplest sense is the art of selling products. To elaborate a bit more, it is the process, or rather group of processes which result in motivating people to decide to purchase a product or avail of a service in return for a financial consideration. Marketing is the key activity for every commercial organization, which operates in a non-monopolistic, free and competitive business and political environment.
It is the prime consideration in the strategic management policy and the domain of top management of every firm engaged in commercial and business activity. Marketing theory, strategy and practice has engaged the attention of scholars and experts for years and while reams of material have been written on the issue, it is not the purpose of this essay to take it up in any detail.
Any discussion on marketing must stress the concept of the four Ps, the four legs of the marketing table, as they were. These are Product, Pricing, Promotion and Placement and no marketing strategy is complete without them. The activity sets have by their ubiquitous ness passed in English language. Product or product management refers to the development and delineation of the actual goods or services and their capacity to meet the needs of the user. Pricing deals with complete pricing strategy, which includes discount policies while Promotions covers the spectrum of activities by which the products are brought to the notice of the customers. This includes brand management, advertising, publicity, exhibitions and any other methods used for product or service promotion. The four Ps, once they are decided and quantified, form the marketing mix and are commonly used for standard low end products.
However, the changes in recent management thought pioneered by experts like Nigel Pierce stress that apart from these factors the success of a marketing effort depends to a large extent on interorganizational relationships. The migration of management thinking towards this mindset had commenced some years back with the introduction of three new Ps, People, Processes and Physical Evidence.
People relate to the people of the organisation who come into contact with customers. For all purposes these people are the human face of the company for outsiders and their suitability, training and company ethos needs to be in line with the firm’s marketing strategy. Processes relate to the process of providing service and deal with behavioural analysis, an area crucial for gauging customer satisfaction. Physical evidence also relates to the marketing of services, an area where the absence of a physical product makes it difficult for a prospect to gauge quality. In such cases, physical evidence of quality, testimonials, beta runs, free trial periods are often used to give the customers a feel of the service before they are needed to make buying decisions.
These theories while they have their relevance are today being continuously challenged by experts like Nigel Piercy of Warwick University and Josh Margolis of Harvard Business School and other experts who feel that intra and inter organizational relationships which develop and also continuously in an organization have an important bearing on operational results and success in the marketplace.
In the area of marketing, for example, it is increasingly being felt that there is a danger in listening too intently to current customers. This thinking, which goes against all tenets of market research feels that customers may not be able to see beyond the current product or service.
Research has shown how previously innovative firms such as IBM and Xerox missed out on disruptive (or radical) innovations that had dramatic effects on their dominant market positions. Precisely because these firms listened to their customers, invested in new technologies that would provide their customers better examples of the existing products that they wanted, and because they carefully studied market trends and systematically allocated investment capital to innovations that promised the best returns, they lost their position of leadership. (Managing Innovation, 2006)
The fast pace of innovation, lack of time to test products are forcing many companies to dispense with age old and widely accepted theories, sometimes with startling success. Today, market demand is thought to be only one of many drivers that lead to marketing and product success. The dynamics and speed of technological developments affect both users and suppliers of technology and many times a coupling of technological opportunity and market potential, like in the case of the I Pod, make for astonishing business results.
Nigel Piercy states that a high level of inter relationship between different functional departments like sales, operations, finance and HR are extremely critical for the success of a business in the marketplace. A high level of communication with correspondingly low communication barriers, and interdepartmental connectedness are critically important, as has been attempted in the diagram shown bellow.
Inter-relationship between different functional departments is critical to the success of a business organization
Functional conflict improves both quality of strategy and performance. Specifically, organizational design characteristics such as formalization, interdepartmental interconnectedness, low communication barriers, and team spirit improve new product performance by enhancing functional conflict, whereas centralization and high communication barriers lower new product performance by increasing dysfunctional conflict.(Menon, Bhardwaj and Howell, 1996)
Lower communication barriers between departments, lead to a sharing of information as well as the generation of different perspectives. In many cases, different points of view lead to conflicts that are beneficial for the organization.
Contrary to the common belief that conflict is limited to a disruptive effect, a number of researchers acknowledge the substantial benefits of conflict to team processes (for example, McDaniel, Littlejohn, & Domenici, 1998; Sessa, 1996). Conflict is a driving force of change (McDaniel et al., 1998). When managed correctly, conflict produces the following results: new ideas for changing organizational processes, solving of continuous problems, a chance for workers to expand their capabilities, and the introduction of creativity into thoughts about organizational problems (Bowditch & Buono, 1997). (Managing Conflict in Work teams, 2005))
Thus, the lowering of communication barriers and the gradual elimination of centralization leads to a high level of proactivity in the functioning of departments like finance, marketing and sales, generating unique perspectives and in some cases, very healthy conflict between these departments.
The management of change is, as is evident from the literature studied until now, at the heart of meeting challenges in todays business environment. There are very few environments where the management of change is not important. While dealing with change organizations have to take account of the fact that “Different people react differently to change, Everyone has fundamental needs that have to be met, Change often involves a loss, and people go through the “loss curve”, Expectations need to be managed realistically and Fears have to be dealt with”. (Change Management, 2005)) Given below are some principles that need to be kept in mind when implementing change.
· Give people information, but do not set unrealistic expectations
· Produce an effective communication strategy
· Give people choices but be honest about consequences of choice
· Assuage potential fears
· Give people time and support their decision making
The six-step change model is also an important tool that is in use in many organizations to make change possible. The six steps involved for effective change management, as adapted from Future Visions Consulting are illustrated with a chart for easier comprehension.
The Six-Step Plan for Effective Change Management
Step One: Gather data
Step Two: Study the data and develop an understanding of the problem
Step Three: Develop a plan
Step Four: Dispute your problem thinking
Step Five: Replace problem thinking with new thinking. This new thinking must be more accurate and true in real life than the old thinking. It must be reasonable and achievable.
Step Six: Reinforce and sustain new thinking
The six-step system is generally adapted for use in specific situations by different organizations. Its intrinsic worth is proving to be very useful, if applied properly to initiate and manage change in corporate and business situations.
3. Data Collection and Methods
Choice of Analytical Approach
The issue at hand deals with a particular business with operations over a large geographical region.
The investigation deals with complex issues involving human psychology, group dynamics and the economics of business organisations. The canvas for research is extensive.
The amount of literature available on topics pertinent to the research is extensive and includes information from literature, texts and journals. The appropriate methodology for data Collection the purpose of this assignment needs to take care of the discussed facts and tailored accordingly.
An article on “Integrating Quantitative and Qualitative Methods in Social Marketing Research” by Nedra Kline Weinrich, first published in 1996 details a methodology, wherein a balanced and well thought out mix of quantitative and qualitative research techniques could well be the most appropriate methodology for conducting this assignment
An examination of the quantitative and qualitative paradigms will help to identify their strengths and weaknesses and how their divergent approaches can complement each other. In most cases, researchers fall into one of the two camps, either relying exclusively upon “objective” survey questionnaires and statistical analyses and eschewing warm and fuzzy qualitative methods, or using only qualitative methodologies, rejecting the quantitative approach as decontextualizing human behaviour. However, it is widely accepted that each approach has positive attributes and that combining different methods, if handled properly, can result in the best of both techniques. (Weinrich, 1996)
Research techniques used for quantitative analysis aim to achieve objective results and eschew subjective interpretation. The respondents are generally selected through random sampling in a statistical manner aimed at achieving a response from the selected sample, which will be representative of the total population. The research methodology pays much greater stress on the technique used and the basic premise on which the technique rests assumes that the quality of the researcher is independent of the results, his or her function being restricted to the following of guidelines. Weinrich postulates that while this technique is effective in a number of cases and is also widely used, it suffers from an inherent danger of missing out on the finer nuances of an investigation and frequently leads to misleading results that are not supported by the future behaviour of the population that had been investigated. As such, while this mode of research may be statistically sound, it could also be the reason behind the oft quoted truth “lies, damned lies and statistics”
Qualitative research methods are vastly different and concentrate on working with smaller groups known as focus groups. These focus groups are selected with great care but later subjected to intensive questioning and interviewing by trained researchers who are very well versed in qualitative techniques. It is the job of these researchers to ensure that their respondents are able to provide them with subjective and interpretative data, which would have never come out with quantitative techniques. The information tends to be much more detailed, full of nuances and give the investigation a holistic result, which is invaluable in assessing outcomes.
There are a number of researchers who believe that qualitative and quantitative research are but two sides of the same coin and members of the same continuum.
Qualitative and quantitative research has philosophical roots in the naturalistic and the positivistic philosophies, respectively. Virtually all qualitative researchers, regardless of their theoretical differences, reflect some sort of individual phenomenological perspective. Most quantitative research approaches, regardless of their theoretical differences, tend to emphasize that there is a common reality on which people can agree. (Newman & Benz, 1998, p. 2)
Qualitative research methodologies are designed to provide the researcher with the perspective of target audience members through immersion in a culture or situation and direct interaction with the people under study. Qualitative methods include observations, in-depth interviews and focus groups. These methods are designed to help researchers understand the complexity of social and organizational phenomena and elucidate mental processes underlying behaviours. Hypotheses are generated during data collection and analysis, and measurements tend to be subjective. In the qualitative paradigm, the researcher becomes the instrument of data collection, and results may vary greatly depending upon who conducts the research.
It is felt that in this case integrating quantitative and qualitative research methods will lend depth and clarity to the research assignment. Data Collection thus has to be from both primary and secondary sources.
Choice of Information Source
The researcher has used both primary and secondary sources of information for compilation of data.
Primary sources used include information available publicly from the company website and information gathered by the researcher during his tenure with the company and interaction wit employees in his and in other departments. .
Population and Sampling
The research methodology focuses on an investigative study of the data sources made available for this study as well as the texts reviewed in the Literature Review. The literature has been chosen with care and studied extensively. In addition to all the secondary sources listed in the references and bibliography, interaction with a number of employees in the finance and other functions gave the researcher extensive information on the working of the company. The Population Sample thus consists of employees in Lodestone Patient Healthcare.
4. Data Findings and Analysis
The data made available to the researcher from primary and secondary sources lends itself to the following analysis
· Lodestone Patient Care is a young company engaged in the diagnostic imaging business and has twenty radiology and diagnostic imaging centres in the UK
· The company is part of large international group engaged in the same business and has access to technological and other support available from the parent organization
· The company has actively pursued its partnership with the NHS and has built up a strong Private Public relationship with the government agency.
· The company, pursuant to its access to the international group I Med has charted out extremely ambitious plans for its growth.
· The company plans to increase the range of its existing services and also double its revenues in the coming year, mainly from its partnership with the NHS
· The company works on an organization structure that is for the most part classical and orthodox with hierarchical organization structures and production of standardized items
· However, recent trends show the introduction of more open communication systems and attempts to informalise communication in the organization
· The company uses standard management controls, consisting of direct supervision combined with a number of technical, standardized software based controls. For example, the days of outstanding debtors is used to gauge the efficiency of the collection and debt recovery function.
· Great stress is placed upon efficiency and customer service
· The company’s operations are focused on fairness towards all patients, usage of modern clinical practice, efficient use of resources, responsiveness to needs of patient, accountability towards its customers and flexibility to ensure satisfaction of individual needs as well as of the wider population
· The use of controls, though primarily statistical supplemented wit direct supervision is handled sensitively and, on occasions, improves performance
· Regular need based training is held for individuals or small groups. This can happen at the instance of the employee or the supervisor
· Departmental supervisors who report directly to the departmental head do performance monitoring. Detailed Performance appraisals are held for individuals and in totality for the department every month.
· Bonuses are distributed for collective working on a six monthly basis
The company under scrutiny, Lodestone Patient Care is a smallish organization, formed just fourteen years ago and operates in the area of specialized medical services. The company has, until now grown, organically, and is a single service company, that of providing various types of imaging services, through its imaging centres. These imaging centres have grown, albeit, slowly, to 20 in a space of 15 years. On an average, the company has added one imaging centre every year.
The company works very closely with the NHS through Private Public Participation and is dependent on its association with the NHS for a major portion of its revenues.
The company, because of the merger of its parent company, with a worldwide organization in the same business has access to the technology, systems and resource of I Med, and now wishes to grow at a much faster rate. In fact, it has an extremely ambitious target of growing by 100 % during the coming year.
The company has a serious debt collection problem. While the standard debt payment cycle is 30 days, it goes up in the case of NHS billing to 90 to 120 days. The business component of the NHS in the total sales of the company is 60 % now and is expected to grow substantially during the coming year. In effect, with 40 % of its revenues being collected in one month and 60 % of its revenues being collected in 4 months, the average debtors at any point of time are 2.8 months, nearly 90 days. While this is high, the worrying factor is that the chances of the debt figure going still higher is very strong because of the increased opportunity of business from the NHS.
The company appears to have established personnel performance appraisal and grading policies, which are in use and serve a limited purpose.
The company appears to have a somewhat rigid organization structure with very high interdepartmental communication barriers. The communication between operating officers of marketing and accounts departments is very poor and this often leads to wrong or late billing. If communication between departments whose work is directly linked to the financial health of the company is so inadequate it is very conceivable that communication between other departments and even within departments will be very low.
5. Conclusions and Recommendations
An assessment of the company’s working and the various practices followed by it lead one to the conclusion that the company, as of now is extremely uncompetitive and will have to effect a significant and wide ranging change in its operating style if it wishes to become a more competitive and significant player in the industry. Most of its troubles originate because of its long association and dependence with the NHS. The NHS business has given the company steady revenues and a false sense of security, allowing it to not effect far reaching internal changes to respond to the marketplace, secure in the knowledge that the business from the NHS will always be there.
The company gets its operating guidelines from its parent company, which is based in Australia. Possibly the fact that control is far way results in a situation where the local heads do not implement their ideas and the parent organization, because of physical distance, and secure in the knowledge of profits being made is unwilling to force its working culture in England.
The company needs to effect changes in many of its functions, including sales, operations, finance and HR. While the company prides itself on its commitment to quality there are confirmed reports of very poor quality of work at Frimley Park and worse, no corrective action appears to be taken.
Change management has to first start at the top of the organization and the company must decide to reduce its dependence upon the NHS. One way of doing this is to take a policy decision that fresh NHS contracts will be taken only if terms of payment are the same as for private customers. This one step will make the company go a long way in becoming far more competitive than it is today and usher in a whole sequence of positive changes.
Introduction of change will need to be thought out very carefully and sincere use of the six-step model, which will force the management to think hard at each step of the way will facilitate the process.
While specific recommendations for changes will need much greater study it does appear that, the management should start thinking seriously about introducing the following changes.
· Decentralizing of operations and decision making
· Reduction of communication barriers
· Facilitation of interdepartmental communication
· Aggressive sales thrust in non NHS markets
· Introduction of Quality Control measures like ServQual
· Enhancement of training opportunities and learning environment
· Invitation of suggestions for change from employees of the organization
The following diagram will make the recommendations clearer.
Requirements to Initiate Change Management in Lodestone Patient Care
These measures will introduce the change process. After a predetermined time frame an internal assessment will need to be made and then a plan will need to be drawn on strategic changes that will need to be made in Lodestone to change it from a sluggish slow growing, rigidly managed organization dependent upon NHS business for its existence and growth.
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