and trust one another。 They need to be able to accept conflict as a healthy
reality and work through it to a successful oute。
Good leadership
First…class leadership is perhaps the most important characteristic that distinguishes
winning teams from the also…rans。 However good the constituent
parts； without leadership a team rapidly disintegrates into a rabble bound
by li。。le but a pay cheque。 （See later in this chapter for more on leadership。）
THE BOARD OF DIRECTORS
One team stands apart from all the others within an organization – the
board of directors； usually reduced to the title ‘the board’。 Directors in
major or public panies have a role outside of that of simply heading
up a function such as production； sales or marketing； though they may
Organizational Behaviour 131
perform one of those functions too。 There is o。。en confusion as to where the
ultimate power rests in a pany； with the directors or the shareholders。
In private panies they are o。。en one and the same body but in public
panies； even where family ties remain； they are distinct and separate。
In law a pany is an entity separate from both its shareholders and
directors。 According to a pany’s articles of association； some powers
are exercised by directors； while certain other powers may be reserved
for the shareholders and exercised at a general meeting。 If the powers
of management are vested in the directors； then they and they alone can
exercise these powers。 The only way in which shareholders can control the
exercise of powers by directors is by altering the articles； or by refusing to
re…elect the directors of whose actions they disapprove。 Some of a director’s
duties； responsibilities； and potential liabilities are：
。 To act in good faith in the interests of the pany； this includes
carrying out duties diligently and honestly。
。 Not to carry on the business of the pany with intent to defraud
creditors or for any fraudulent purpose。
。 Not knowingly to allow the pany to trade while insolvent； directors
who do so may have to pay for the debts incurred by the pany
while insolvent。
。 Not to deceive shareholders and to appoint auditors to oversee the
accounting records。
。 To have regard for the interests of employees in general。
。 To ply with the requirements of the panies Acts； such as providing
what is needed in accounting records or filing accounts。
position of the board
The board is made up of two types of directors； internal and external； and
typically the board would exercise major decisions through a number of
mi。。ees：
。 Internal directors： Usually headed up by a chairman who runs board
meetings； a CEO （chief executive officer） or managing director who
runs the operating business and a number of other directors。
。 External directors： Known as non…executive directors； they are usually
people of stature and experience who can act as both a source of wise
independent advice and a check on any wilder elements on a board。
Venture Investment Partners Ltd （ventureip。uk） and The
Independent Director Initiative （independentdirector。uk）；
a joint venture between Ernst & Young and the Institute of Directors；
have information on the role of non…executive director； as well as being
132 The Thirty…Day MBA
potential sources of appointments in smaller panies that might
appeal to an ambitious； risk…happy MBA。
。 mi。。ees： The main board mi。。ees are those that oversee remuneration
（particularly for directors）； auditing； social responsibility （and
‘green’ ma。。ers）； mergers and acquisitions； and regulatory affairs。
PEOPLE
If structures are the skeleton of an organization； people are its blood and
guts。 Douglas McGregor； a founding faculty member of MIT’s Sloan School
of Management； began his management classic The Human Side of Enterprise；
published in 1960； with the question： ‘What are your assumptions （implicit
as well as explicit） about the most effective way to manage people？’ This
seemingly simple question led to a fundamental revolution in management
thinking。 McGregor went on to claim： ‘The effectiveness of organizations
could be at least doubled if managers could discover how to tap into the
unrealized potential present in their workforces。’
Finding the right people； keeping them onside； motivating； managing and
rewarding them are the defining distinctions between the most successful
organizations and the mediocre。 Over the past 30 years or so； organizations
have acquired centralized HR （human resources） departments whose
purpose is to facilitate people issues； as they o。。en quaintly term their work。
McGregor anticipated their arrival with this pithy quote：
It is one of the favourite pastimes of management to decide； from within their
professional ivory tower； what help the field organization needs and then
to design and develop programs for meeting these needs。 Then it bees
necessary to get the field organization to accept the help provided。 This is
normally the role of the Change Manager； to implement the change that noone
asked for or wants。
None of this is to suggest that HR departments can’t contribute to helping
with ‘people issues’。 It’s just that people issues are too important to exclude
their immediate superiors from。 At the very least； MBA skills include
a sound grasp of the key tasks that the HR department is charged with
performing。
Recruitment and selection
Taking on new employees is o。。en a more expensive exercise than buying
a major item of machinery or a heavy goods vehicle。 If that sounds improbable；
just check out the figures； the advertising for a middle…ranking
executive on a salary of； say； ￡40；000 may well cost ￡6；000。 If they are taken
on using a recruitment consultant you can expect a bill of around a fi。。h of
Organizational Behaviour 133
the first year’s pay （￡8；000）。 Three days’ interviewing； psychometric testing；
preparing a contract of employment； perhaps paying a share of the
new employee’s removal expenses will bring the total bill up to around
￡20；000。 If you get the wrong candidate； and there is a good chance of that
happening if you fail with any element of the recruitment process； then you
may have to double that figure。 Then； of course； there is the cost of not getting
the job done that you were recruiting for in the first place。
These are the key stages in the recruitment process。
Writing the job description
O。。en employers draw up the job description a。。er they have found the
candidate。 This is a mistake； having it from the outset narrows down your
search for suitable candidates； focuses you on specific search methods
BEBO
Michael Birch had what might be seen as six dummy runs before cofounding
Bebo。 He was a pioneer in the social networking site world；
starting up Ringo back in 2003； selling it on quickly – with the benefit
of hindsight perhaps too quickly。 Operating out of a 120 sq ft office in
the suburbs of San Francisco； overwhelmed with the initial site traffic
and lacking finance； they sold Ringo within six months。
Birch and his wife Xochi met up while studying physics at Imperial
College； London。 After a six…year slog at Zurich Insurance in puter
programming he left； frustrated by the overly bureaucratic environment；
a lesson in organizational behaviour that he was to apply to advantage
in future ventures。 The Birches then started out on their path as serial
entrepreneurs。 Their first three dot start…ups were unsuccessful； but
then their luck changed。 BirthdayAlarm； initially a simple alert
service that evolved into an e…cards business； was followed by Ringo；
whose sale gave them some cash to roll on to a more substantial
venture。 Applying everything they had learnt from Ringo and what
wasn’t working on MySpace； the Birches aimed Bebo squarely at the
thirty…something age group； but rapidly refocused on teenagers； the
site’s early adopters。
Within two years of starting； Bebo became the most visited social
networking site from within the UK； attracting 10。6 million unique visitors；
an increase of 63 per cent over the start of the year； ahead of Myspace。
； with j