Published in Businessworld, View from Taft column, February 16, 2006
The emergence of the information and communications technology (ICT) and allied industries in recent years has lead to the phenomenal growth in employment opportunities in various sectors. For instance, the number of professionals in the business process outsourcing (BPO) sector has been growing exponentially since 2001; and to date, there are around 100,000 employed call center agents, customer service reps, BPO managers, and other IT professionals that interact with clients from all over the globe and other parts of the value chain.
Likewise, the growth in telecommunications services sector has resulted to the growing number of professionals in software development, sales and marketing, and even entrepreneurs and business managers whose jobs are anything but routine.
These professionals and employees not limited to the ICT industry, such as customer service representatives, managers, and salespeople, make up the fastest growing services segment. And their jobs involve the most complex type of interactions with other employees, customers, suppliers, partners and other organizations. Such complex interactions require employees to analyze information, solve problems, deal with ambiguity, and make complex decisions based on deep experience, knowledge, judgment, and instinct.
This trend in employment has already been discovered by a 1997 study of consulting firm, McKinsey, on job trends in a number of sectors in developed and developing countries, which found that companies are hiring more workers for complex than for less complex interactions. This is because the quality of human capital has more lasting advantages in terms of productivity gains.
In a recent follow up research titled “The next revolution in interactions”, McKinsey emphasized that complex interactions typically require people to deal with ambiguity and to exercise high levels of judgment. These workers (such as managers, salespeople, customer service reps, nurses, mediators, brokers, and consultants) must apply deep experience, which economists call “tacit knowledge”.
According to the study, “successful efforts to exploit the growing importance of complex interactions could well generate durable competitive advantages.” While many companies especially in developed countries have reaped the benefits of outsourcing clerical and production jobs, automating, and reengineering to improve labor productivity, these have been short-lived as other companies adopted similar process improvements.
But the competitive advantage gained by companies by raising the productivity of their human capital through the exploitation of complex interactions, is more enduring as this is much harder to imitate.
Consider, for example, two vendors selling to a large account. Vendor A employs three salespeople to cover the three different business units of the large account. But these salespeople, due to probably limited knowledge and experience, interact only with the assigned client group and the back-office support of their organization. Their decisions on certain marketing parameters as pricing and product offering may be less exhaustive and takes more time to implement.
Compare this with Vendor B, which employs only one salesperson to cover the three business units of the large account. This salesperson, on the other hand, has more industry experience, deep knowledge of business concepts, and interpersonal communication skills. Moreover, he or she interacts with not only the clients and back office support, but also with other suppliers, potential partners, and industry groups to help him or her spot opportunities and decide on solution and product offerings and sales strategy in a faster and more responsive way.
Obviously, the productivity of the salesperson in Vendor B is greater than that in each of the salesperson in Vendor A. But one may argue that because of deeper experience, the former may command a higher salary than the latter. True enough based on the McKinsey research, “workers who undertake complex, interactive jobs typically command higher salaries, and their actions have a disproportionate impact on the ability of companies to woo customers, to compete, and to earn profits.” Thus, “the potential gains to be realized by making these employees more effective at what they do and by helping them to do it more cost effectively are huge.”
So how can companies enable their employees to handle and manage complex interactions? Firstly, organizations need to adopt policies and structures that are conducive to the effective and efficient handling of complex interactions, such as flexible work hours and availability of “representation” budget to allow the highly skilled worker to organize face-to-face interactions with ease. Key to retaining these talented professionals are HR and management policies that allow them to perform their functions with minimal slow-down effects of organizational bureaucracy.
Secondly, McKinsey points to the use of technologies to enable managers and employees alike to make available critical information to help them make decisions more effectively and quickly. The use of mobile devices and services, such as WeRoam wireless Internet service through a laptop coupled with collaboration applications such as instant messaging, empowers the highly skilled worker to perform multiple tasks and interact with the various players in the value chain “by helping them to recognize complex patterns, to solve novel problems, and to manage interpersonal and group dynamics.”
Lastly, organizations need to implement practicable training and mentoring programs to help inexperienced workers acquire and learn the necessary skills and frameworks to help them handle complex interactions.
In other words, the worker should be empowered to make decisions that influence the organization’s direction and performance. Empowered workers, with the right skills and experience, manage complex interactions far better than those lacking these; thus, resulting a competitive advantage to organizations that are more lasting and harder to imitate.
---------------------------
Reynaldo Lugtu, Jr. is a lecturer in Management Principles in the MBA Program of De La Salle Professional Schools. He may be e-mailed at rlugtu2002@yahoo.com.
The emergence of the information and communications technology (ICT) and allied industries in recent years has lead to the phenomenal growth in employment opportunities in various sectors. For instance, the number of professionals in the business process outsourcing (BPO) sector has been growing exponentially since 2001; and to date, there are around 100,000 employed call center agents, customer service reps, BPO managers, and other IT professionals that interact with clients from all over the globe and other parts of the value chain.
Likewise, the growth in telecommunications services sector has resulted to the growing number of professionals in software development, sales and marketing, and even entrepreneurs and business managers whose jobs are anything but routine.
These professionals and employees not limited to the ICT industry, such as customer service representatives, managers, and salespeople, make up the fastest growing services segment. And their jobs involve the most complex type of interactions with other employees, customers, suppliers, partners and other organizations. Such complex interactions require employees to analyze information, solve problems, deal with ambiguity, and make complex decisions based on deep experience, knowledge, judgment, and instinct.
This trend in employment has already been discovered by a 1997 study of consulting firm, McKinsey, on job trends in a number of sectors in developed and developing countries, which found that companies are hiring more workers for complex than for less complex interactions. This is because the quality of human capital has more lasting advantages in terms of productivity gains.
In a recent follow up research titled “The next revolution in interactions”, McKinsey emphasized that complex interactions typically require people to deal with ambiguity and to exercise high levels of judgment. These workers (such as managers, salespeople, customer service reps, nurses, mediators, brokers, and consultants) must apply deep experience, which economists call “tacit knowledge”.
According to the study, “successful efforts to exploit the growing importance of complex interactions could well generate durable competitive advantages.” While many companies especially in developed countries have reaped the benefits of outsourcing clerical and production jobs, automating, and reengineering to improve labor productivity, these have been short-lived as other companies adopted similar process improvements.
But the competitive advantage gained by companies by raising the productivity of their human capital through the exploitation of complex interactions, is more enduring as this is much harder to imitate.
Consider, for example, two vendors selling to a large account. Vendor A employs three salespeople to cover the three different business units of the large account. But these salespeople, due to probably limited knowledge and experience, interact only with the assigned client group and the back-office support of their organization. Their decisions on certain marketing parameters as pricing and product offering may be less exhaustive and takes more time to implement.
Compare this with Vendor B, which employs only one salesperson to cover the three business units of the large account. This salesperson, on the other hand, has more industry experience, deep knowledge of business concepts, and interpersonal communication skills. Moreover, he or she interacts with not only the clients and back office support, but also with other suppliers, potential partners, and industry groups to help him or her spot opportunities and decide on solution and product offerings and sales strategy in a faster and more responsive way.
Obviously, the productivity of the salesperson in Vendor B is greater than that in each of the salesperson in Vendor A. But one may argue that because of deeper experience, the former may command a higher salary than the latter. True enough based on the McKinsey research, “workers who undertake complex, interactive jobs typically command higher salaries, and their actions have a disproportionate impact on the ability of companies to woo customers, to compete, and to earn profits.” Thus, “the potential gains to be realized by making these employees more effective at what they do and by helping them to do it more cost effectively are huge.”
So how can companies enable their employees to handle and manage complex interactions? Firstly, organizations need to adopt policies and structures that are conducive to the effective and efficient handling of complex interactions, such as flexible work hours and availability of “representation” budget to allow the highly skilled worker to organize face-to-face interactions with ease. Key to retaining these talented professionals are HR and management policies that allow them to perform their functions with minimal slow-down effects of organizational bureaucracy.
Secondly, McKinsey points to the use of technologies to enable managers and employees alike to make available critical information to help them make decisions more effectively and quickly. The use of mobile devices and services, such as WeRoam wireless Internet service through a laptop coupled with collaboration applications such as instant messaging, empowers the highly skilled worker to perform multiple tasks and interact with the various players in the value chain “by helping them to recognize complex patterns, to solve novel problems, and to manage interpersonal and group dynamics.”
Lastly, organizations need to implement practicable training and mentoring programs to help inexperienced workers acquire and learn the necessary skills and frameworks to help them handle complex interactions.
In other words, the worker should be empowered to make decisions that influence the organization’s direction and performance. Empowered workers, with the right skills and experience, manage complex interactions far better than those lacking these; thus, resulting a competitive advantage to organizations that are more lasting and harder to imitate.
---------------------------
Reynaldo Lugtu, Jr. is a lecturer in Management Principles in the MBA Program of De La Salle Professional Schools. He may be e-mailed at rlugtu2002@yahoo.com.
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