Archive for 'How You Benefit From R-pM'

Business owners and investors lose the most due to the unmanaged business

Business enterprises today manage the enterprise as a company, corporation, or other form of organization. The business owner and shareholder profits are reduced due to the waste and inefficiencies involved in managing the enterprise using structures laid over the business. The enterprise invests in capital, but the capital investments are not defined or managed as part of the business. The enterprise must produce specific goods, services, and other output results to be successful, but these results are not defined and managed as part of the business. The capital investments must be utilized in business performance to produce specific results but business performance is not defined or managed. The rigid enterprise organization, corporate plan, financial account, cost account, business process, performance management, and other structures, used for enterprise management, conflict with the changing business causing unsolvable 20^th century enterprise management problems.

Business owners have the most to gain from directly managing the business

The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. The business can be organized only by organizing specific capital investments in the business as specific human and other capital solutions of managed worth to be utilized in business performance, organizing specific output results of managed value that must be produced by business performance, and organizing business performance in the utilization of specific solutions to produce specific results to manage costs and result value-added across the business. Organizing the business for 21^st century management slashes costs and compounds competitive advantage.

Business owners, from small businesses to corporate investors, have the most to gain by organizing and managing the business. [more...].

20^th century enterprise management administers human resources

20^th century enterprise management provides the human resource function to administer human resources. Human resources provide administration for recruitment, actions, payroll, and some development functions. While human capital may be called human capital, rarely is there any real effort to develop humans as actual capital solutions to meet the specific business needs and increase individual human worth to the enterprise.

20^th century enterprise management cannot develop and apply human and knowledge capital directly to the business

Some more advanced companies try to develop human capital, but as humans rather than as the specific capital solutions needed by the business. They are at a disadvantage because the business is not organized to define specific business needs, to understand where special capabilities are required in the business, to understand the value created in the business through application of human capabilities, and the added worth of human capabilities through value creation.

Rule No. 8 of 21^st century business management: Manage human personnel, capability, and knowledge capital to increase human worth

21^st century business management organizes the business results produced and human capital as specific solutions to be utilized to produce specific results. Rule No. 8 requires that human capital be identified as specific capital solutions utilized to produce business results, investments be made to develop human capital to increase the value of assigned results, human capital performance be managed against the results produced to increase human worth, and that human reward be a commensurate part of proven human worth to the business. As part of this rule, there are business management principles for strong human capital management:

• Define economic output results that must be produced across the business and those high-value results that require specific human capability solutions
• Analyze the business process to produce difficult high-value results and describe how human capabilities must utilize the process
• Define specific high-worth capabilities to produce high-value results as capital solutions for specific human knowledge and human capability development
• Focus human capital on results, so that they always know the results expected and how to apply their capabilities to produce results
• Develop human capabilities as specific capital solutions to produce specific high-value results
• Support human capital with knowledge capital to utilize specific capital solutions to produce specific results
• Let human capital know the value of their results and how their performance can add value to results
• Let human capital know the relationship between the value added to results produced and their worth to the enterprise as human capital
• Compensate and reward human capital in accordance with their human capital worth

Strategic human capital development develops the capabilities described in the business process and the knowledge required to produce new high-value strategic results. [more...].

The Chief Executive Officers and their management methods are being criticized

The economic crisis is generating criticism of the Chief Executive Officers (CEO) and the 20^th century management structures they use. CEOs must heed this criticism and take a new look at current 20^th century management structures and the limitations imposed on their own performance by the structures.

The Chief Executive Officer is responsible for the quality and value of results produced by the corporation businesses from suppliers to the customer, value creation in the enterprise strategy, the full costs incurred from the utilization of tangible and intangible capital, the real return from each capital investment and capital development project, the worth of human and other capital employed, the current worth of financial investments to produce income and growth results, and value-added across the businesses to create shareholder value. The CEO must do this in spite of the fact that 20^th century management used today, does not provide the means to manage any of these CEO responsibilities.

The only solution for the Chief Executive Officer is to manage the actual corporation business

The actual business that must be managed is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Each business, within the corporation must be managed and the separate businesses must consolidate into one corporation business. In order to manage the business, output results must be defined and managed as one complete data set. Capital investments in specific solutions that can be utilized to produce results must be defined and managed as another data set. The implementation of capital solutions to produce specific results and subsequent utilization in performance must be defined and managed as a third data set. Fortunately for the CEO the actual corporation business can now be managed. [more...].

Investors are the big losers in the economic crisis

Corporate investors have lost trillions of US Dollars in the current economic crisis. The recession appears to be long and deep delaying any gains in a recovery. Investors need to understand the fundamental problem causing the widespread problems in financial institutions and corporations around the world. Corporate investors are up against conventional corporate management thinking, which propagates dead-end 20^th century management and prevents 21^st century business management. Every business in a corporation must be managed consistently to consolidate into one corporate business. Corporate shareholders must pressure corporate management to manage the actual corporate businesses to eliminate the problems that caused past and present crisis, and surely will cause future crisis.

Investors lose because they invest in corporations that do not organize, plan, direct, or control the business

The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. Corporations do not manage the business today. They organize the corporation with an organization structure, plan with strategy and corporate plan structures, direct with function and process structures, control with account and quality structures, report with compliance and financial reporting structures. The structures laid over the business are not related to the business, often are not related to each other, consume enormous IT resources and costs, and do not collect or report actual data concerning the business.< [more...].

The current economic crisis arises because managers do not manage the business

Business managers today do not manage their businesses. Business managers employ dead-end 20^th century management to manage structures laid over the business. Business managers must manage the actual business as “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. All business decisions and information needs boil down to business results needed for success, capital investments to provide qualified solutions, and the utilization of solutions to produce results,

The failure to manage the business is the one underlying cause of symptoms of economic recession in the unknown “asset values”, unmanaged speculation that built bubbles, unknown product value and costs, corporate business consolidation problems, accounting failures, lack of business transparency, unknown human value-added to the business, and on and on. The problem can never be solved until managers around the world organize their businesses for 21^st Century Management. The managed business provides significant competitive advantage over enterprises burdened by unsolvable 20^th century management problems.

Business managers must recognize their unsolvable problems and the need for actual business management

All business schools, management books, packaged solutions, and on-the-job learning propagate dead-end 20^th century management. But, 20^th century management is not natural management. Managers must invest time to contrive, learn, and work with structures laid over the business, such as the organization chart, corporate plan, processes and systems, chart of accounts, costing activities, positions and salary scales, quality structures, scorecards, and on and on. Corporate executives and other managers thus have lifetimes invested in learning and working with 20^th century management. It is difficult to contemplate that 20^th century management should be replaced.

Managers must open their minds to recognize that 20^th century management has never organized and managed the business. They must recognize that their actual business is hidden under structures that prevent actual business data capture or use of actual business management information. They must recognize the unsolvable problems they have faced throughout their careers that cost their enterprises and cause enormous waste. They must recognize that continuing 20^th century management will never solve the problems that caused the financial and economic crisis or current business downturns. They must think of the benefits of clearing away overlaid structures and concentrating on their actual business.

Managers must think in terms of actual business management

Managers must recognize the inevitability of organizing the actual business for 21^st Century Management. 21^st Century Management is now gaining momentum and all managers will be faced with the need to learn, organize, and manage their business. [more...]s.

Human capital is administered as human resources and their worth in the value added to the business is unknown

In most enterprises, human resources are administered as employees and are assigned to positions in organization units. There is no way to measure the value they produce, evaluate performance costs against the value created, assess their worth as human capital, or to develop them to increase their worth and provide measured increased value to the enterprise. Administered employees do not have a defined stake in the enterprise.

The economic crisis shows that banks and other corporations do not plan, manage, and account for human worth in the value-added to the corporate business, giving rise to perceived unmanaged executive compensation and staff rewards. The only way to eliminate the problems that caused the economic crisis is to manage the business and to manage human capital as part of the business.

20^th century human resource management methods prevent good human capital management

There is a lot of talk about human capital, intellectual capital, knowledge management and other means to improve the capabilities, productivity, and output of human capital. But, each item is treated separately. We try to manage human performance, but have no framework to understand real human performance related to measured value to the business. We try to develop human capabilities, but have no framework to relate human capabilities to specific business needs. We have no way to integrate human capital performance with the value created and the worth of human capital.

We must manage the business to manage the worth of capital in development costs and the future value added to results produced

Before we can manage human capital properly, we must organize the business for 21^st century management. The business is “investments in capital as solutions of worth utilized for costs and effectiveness of performance to produce value and quality in results”. We must identify and organizes the results needed for business success, the human and other capital solutions needed to produce results, and performance in the utilization of each solution to produce each result. We must manage the development and utilization of specific human capital solutions to produce measured result value, to increase capital worth, and justify increased performance costs.

We must improve human performance by managing the results humans produce

The key to making human capital a high-worth asset is to manage the results our enterprise produces related to human and other capital utilized. [more...].

The financial crisis shows the confusion in business, finance, and economic management

The financial crisis causes serious concerns about the methods for business, financial, and economic management. All of a sudden, banks, financial institutions, and other enterprises realize that they do not manage their actual business and finances. We see the impact in the worldwide economic downturn. The financial crisis has shown one thing conclusively. We do not understand fundamental business, financial, and economic management problems. Efforts to date are guesswork at ways to ease the situation.

We need new solutions to business, financial, and economic management

Continual business, financial, and corporate governance problems are caused by deficient 20^th century management used today to manage the enterprise rather than the business. Economic crises occur because businesses are not managed in concert with markets, demand, supply, and coherent government policy. But, no one knows real business management. Corrective actions address conventional enterprise management, and impose more government regulation and compliance reporting on enterprises.

For several years, Business Change Forum has been discussing the unsolvable problems of 20^th century management. Now is the time for all to wake up to the unsolvable problems inherent in 20^th century management that lays easily-distorted contrived structures over the business, preventing actual business management. [more...]t.

R-pM is a breakthrough to manage the actual business and leave 20^th century management problems behind

R-pM organizes and manages the actual business, “the utilization of capital of worth in performance to incur costs and produce value in results”, without 20^th century management problems with reorganization, business change, business and information complexity, complex and costly IT infrastructures, unknown costs and value, unknown capital worth and returns, excessive overheads and costs from overlaid structures, and on and on.

R-pM is a new natural business perspective requiring little investment or risk

R-pM minimizes capital to that required by the business, optimizes business performance to reduce performance costs and increase result value, and manages result value-quality chains to produce customer input results. R-pM provides enormous competitive advantage, while the investment and risk is minimal. R-pM is mainly a change in thinking, which requires time to take hold. Human capital learns to operate and manage the actual business, instead of structures laid over the business. Existing information systems likely can be utilized as business process solutions, if the business is properly defined and organized.

The existing business is gradually redefined into result value-quality chains and one integrated business structure. Obsolete structures laid over the business and unsolvable 20^th century management problems are gradually abolished. As the enterprise learns R-pM, implementation accelerates and the competitive advantage of R-pM increases until the complete business is organized for 21^st Century Management.

Owners, investors, shareholders, lenders and others with a financial interest must lead the way to manage the actual business

Business owners, shareholders, potential investors, lenders, etc have the most to gain by being among the first to use R-pM. [more...].

Result-performance Management (R-pM) organizes the actual business for 21^st Century Management. 21^st Century Management is based on directly organizing and managing the enterprise business.

The primary differences between R-pM and current 20^th century management are:

• R-pM separates 20^th century performance into two separate entities; results, the economic outputs of value produced by the business, and performance, the utilization of capital in the business
• R-pM defines and organizes the enterprise business rather than the business enterprise by structuring the results produced across the business and the capital utilized as performance solutions to produce results
• R-pM organizes the enterprise business, each part of the business, and all enterprise undertakings, such as projects, through an integrated business structure to replace all 20^th century structures
• R-pM replaces 20^th century administration with capital management to provide the capabilities to professionally manage all capital in development, implementation, operation, and support
• R-pM plans, records, reports, and manages actual business data in result value-quality, performance cost-effectiveness, result value-added, and capital worth, rather than reporting inaccurate contrived structures laid over the business
• R-pM manages the business in three dimensions, result management responsible for each result produced, performance management responsible for each performance solution utilized, and corporate management responsible for creating strategic result value over time in operations and development

These differences are discussed in the following paragraphs.

R-pM separates results from performance

20^th century management defines “performance” to include not only the performance, such as human performance, that produces a result but also the result produced, such as sales performance. This definition prevents results and performance from being managed properly as separate entities. 20^th century performance management, business processes, information systems, etc mix results with performance.

R-pM separates results from performance to manage results as one set of results produced by the enterprise business and to manage the capital employed by the business in performance as one set of performance solutions. Results have different attributes from performance. Therefore, result data is captured and reported separate from performance data.

R-pM organizes the enterprise business, rather than the business enterprise

20^th century management organizes the enterprise by laying an arbitrary organization structure over the business. [more...]

There are a wide variety of performance managers in 20^th century management. Performance managers may be responsible for human performance management, business performance management, capital performance management, or management performance. Similar performance management responsibilities remain under 21^st Century Management. But under 21^st Century Management, performance management responsibilities are precisely defined.

20^th century management mixes results with performance and manages both as performance

One serious flaw of 20^th century management is the definition of performance. Performance is defined to include not only the activity of performance but also the results produced from performance. This definition prevents 20^th century management from managing the business defined as “the activity of providing goods and services”. Both the activity and the goods and services are defined as “performance”. Performance management systems, business performance management, business process management, and other 20^th century management methods employ this definition.

The performance manager must work in a poorly defined environment. [more...]