The CIMA Edge December 2010

CIMA Sri Lanka division VOL 2 ISSUE 6 December 2010 2010201020102010 2010 CONTENTS 1 Informational, technological and global forces of change: the impact on management accounting 2 Evening discussion on 2011 budget highlights 3 New ‘double entries’ e-newsletter sponsored

by CIMA 4 Organisational culture and its impact on performance 5 The glass ceiling: strategies for career progression

Members and partners are cordially invited to contribute to The CIMA Edge by email to nilushika.gunasekera @cimaglobal.com Disclaimer: opinions expressed are the contributors’ own and do not necessarily represent the views of the institution or the organisations by which they are employed.

CIMA Sri Lanka recently had their annual Technical Symposium focusing on theme ‘Transformation: the compulsory choice’, and I thought it would be relevant to share some of the key areas that were discussed at this technically reviving forum.

Globalisation and rapid advances in technology are changing the world we knew less than a decade ago. Most of these changes exerted from the external environment demands that organisations rethink their traditional business models, management practices and strategies not only for growth - but for mere survival itself. The theme itself is a paradox. A company can choose to be blissfully ignorant of this dire need and continue business as they did ten years ago, or they can chose to transform. But, the truth of the matter is that, if a company fails to successfully transform and evolve with the changing environment, that company may not see the long-haul.

The symposium explored different ways and means of transforming one’s business. Encouraging creative decision making at board level, bringing ethics and sustainability to mainstream business strategy, working towards establishing agile supply chains, establishing strong finance-business partnerships and most importantly using the right tools to lead knowledge teams were the core themes deliberated at this conference.

One important fact to note is that a business is nothing but a collection of people. Therefore, business transformation will only take place when the people engaged in the business truly transform their thinking.

Nilushika Gunasekera

Content: feature articles Informational, technological and global forces of change: the impact on management accounting by professor Al Bhimani Over the past ten years, a number of wide level economic changes have occurred which will reshape the finance function. The economy has witnessed the dotcom crash coupled with the transformative impact of the internet. Enterprises also now need to address tighter corporate governance regulatory requirements and more robust risk management practices .

CIMA Sri Lanka evening discussion on 2011 budget highlights The 2011 budget proposals consistently portrayed the government’s strategy of facilitating economic development by encouraging private sector investment.

Organisational culture and its impact on performance by Dharshan Cooray This article aims to address the key aspects of organisational culture and its impact on performance in a global context. Application and comparison of learning outcomes in the Sri Lankan context will be done considering industrial case based examples .

The glass ceiling: strategies for career progression Men and women lead differently but their different leadership styles and traits complement each other. So, find what works for you best and stay focus on your career at all times.

News and events CIMA recognised the people, teams and organisations that have been instrumental in developing the finance profession at the CIMA annual awards held last month.

Shiromy Mohamed Ali, studying at the Virtual Business School, Sri Lanka was the winner of the case study success award.

Sugeeth Patabendige, lecturer at Wisdom Business Academy, Sri Lanka was the winner of the tutor of the year award.

Muhammad Hassan Siddiq, senior manager of business analysis and planning at Gulahmed Textile Mills, Pakistan was the winner of the distance learning student of the year award.

Union Assurance, Sri Lanka was highly commended under the annual report of the year award.

Sri Lanka Upcoming events CIMA Mastercourse on Taxation 2011 16 January - 20 March | CIMA auditorium | Colombo Past CIMA Technical Symposium 2010 was held on 24 November 2010 at the Cinnamon Lakeside hotel on theme ‘Transformation: the compulsory choice’ CIMA evening discussion on 2011 budget highlights was held 26 November 2010 at the Hilton Residencies, Colombo.

Bangladesh Past A technical forum on ‘What we haven’t changed needs changing now: management accounting’s change agenda’ was held on 5 November 2010 at the Dhaka Sheraton deliberated by Dr Danture Wickramasinghe.

feature article Informational, technological and global forces of change: the impact on management accounting by Professor Al Bhimani Alnoor Bhimani is professor of management accounting and head of the department of accounting at the London School of Economics.

He possesses an MBA from Cornell University where he was a Fulbright scholar and holds a PhD from LSE. He is also a Certified Management Accountant (Canada). He has an extensive list of scholarly publications and serves on the editorial board of numerous journals. He is the author of 15 books and over 100 articles. His edited book Management accounting in the digital economy (OUP, 2003) and Strategic finance (Strategy Press, 2008) and his co-authored book Management accounting: prospect and retrospect (CIMA/Elsevier, 2009) are regarded to drive innovative thinking and research in the area.

1. Introduction Consultants, management commentators and accounting scholars called for a radical transformation of financial management practices during the 1990s. Many companies heeded these calls for change and within a short space of time, numerous enterprises were deploying new tools for managing costs including activity based management, throughput accounting, life cycle costing, target cost management and the balanced scorecard. A transformation of managerial accounting practices was in the making within many companies. Today, signs abound that an even more disruptive era of change in financial practices is about to reshape enterprise accounting practices.

In the recent past, a variety of wide level economic changes have occurred, which will affect accounting and the work of the finance function. The economy has witnessed the dotcom crash coupled with the transformative impact of the internet. Also, enterprises today need to address tighter corporate governance regulatory requirements and more robust risk management practices.

Competition is emerging for many companies from new forms of strategic alliances and joint ventures globally. The deepest recession worldwide since the ‘great depression’ and the most extensive bail out initiatives actioned by governments in modern times will also inevitably influence the management of modern enterprises. The effects of these forces will greatly shape finance practices in the years to come.

2. What change brings Many managers believe that the only constancy today is the swift pace of change facing business environments. What was regarded as ‘normal’ yesterday is rapidly altering. A ‘new normal’ is emerging (Davis, 2009). The global financial crisis and the now altered economic environment are having significant effects on the finance functions within many companies. Financial leverage which was easily attained in very high degrees in certain lending contexts until 2007 was achieved because of legitimate financial innovations on the one hand whilst also due to undesirably lax lending practices on the other. The new situation facing the global economy engenders many changes which are already starting to be felt.

The continued availability of ready finance and high leverage is unlikely to exist in the future. Investors and stakeholders will more closely monitor investment activities and performance to ensure the achievement of expected yields and anticipated returns to equity.

Real productivity increases will be prioritised over paper returns.

Additionally, the regulatory infrastructure underlying organisational activities will expand. Transparency, accountability and greater orders of disclosure will prevail. More regulatory stipulations and closer monitoring of enterprise operational effectiveness as opposed to the evaluation of investment yield accruing extensively from leverage strategies will shape the finance function.

Growth in the financial monitoring of operational activities will not be the sole source of impact on the profession arising from the altered economic environment. Nor will it necessarily fundamentally shift the raison d’être of the finance function.

The ongoing impact of wide economic forces of change on the structure of organisations including the rapid pace of digitisation across the global economy and the demand for a more transparent assessment of their activities will also force deep changes in the modus operandi of the finance function. These two effects are considered below.

3. Digitisation and accounting Computers have shaped business activities for over four decades, but a profound second wave digital revolution took place only during the mid 1990’s. Three forces became intertwined at this time: the spread of user friendly operating systems and interfaces, the rapid diffusion of the internet and the worldwide web; and the convergence of four formerly distinct industries – computers, software, communications and media and entertainment. These three factors led to the creation of a huge worldwide value network with attendant new business models and novel ways for enterprise architectures to form and enable the generation of wealth creation.

Concurrently, business intelligence has started to crowd out different sources of information.

It has always been the case that what consumers and decisionmakers do with information can insightfully shed light on what drives their purchases or actions. So traditionally, enterprises have designed information systems to produce formal information which system users purposefully deploy according to the actions of customers. But, a shift in information design structures is currently taking place. There is now a realisation that what information users discard can be equally if not more useful as a source of business intelligence for companies. A customer buying online will often leave a trail of information disclosed prior to making the purchase.

This ‘data exhaust’, if effectively analysed, can help organisations determine how and what individuals rationalise and the path they take before they arrive at a purchase or a decision. Google.com learns from every search process carried out. Amazon.com gathers information from online customer behaviour irrespective of whether a purchase is made or not.

Ebay monitors buyer and seller activities even where no economic transactions take place. These companies analyse data exhaust in the provision of important financial intelligence which can shape cost management, pricing decisions and operational controls.

Drawing business intelligence from information not just on transactions, but about searching behaviour, website surfing, browsing experience has, for web-enabled firms, become a basis for competitive engagement. This in the future will increase in significance. As information that is transactions agnostic grows, data volume and information management will expand and place important challenges on financial systems.

The amount of data produced globally grows ten-fold every five years. The pace of information growth is partly reflective of the increase of media, entertainment and social networking possibilities online. Whilst much of the information is unstructured, a significant proportion is amenable to structuring in an economically purposeful sense. This growth of information alongside the possibilities presented by data exhaust enables analysis and assessment by firms in a useful manner.

feature article For instance, purchases made via Amazon are often tied to purchases made previously. Probabilities can be established based on the likelihood of particular subsequent purchases being made based on data collected about macro-level buying behaviour, nonpurchases and prior online interactive searches. EBay, likewise, continuously alters its listings based on prior listing activity, bidding behaviour, pricing trends, search terms used and purchase frequency. Google searches become continuously more relevant because search results are based on what users with prior similar searches eventually stayed with.

In this sense, data trails left by surfers enable data mining which can be deployed to directly impact pricing policy, cost containment prioritisation and cash and working capital management strategies, whilst data mining increasingly shapes financial control and management possibilities, traditionally the finance functions has been influenced by information collection about products by information systems overseeing transformations. There is however a growing trend toward the collection of information from within products and processes, themselves. Pill shaped micro-camera, precision agricultural and industrial sensors and radio frequencies identification tags enable real time data collections without the need for separate information systems.

Continuous information collection on possible product purchase pathways as well as cost changes, dynamic pricing options and working capital management possibilities emerge when products and processes themselves collect and transform information about their own behaviour. This presents novel possibilities for financial management whereby the finance function can become a receptor and assessor of information for real time analysis and decisions.

4. Standard risks One definition of information is that it decreases uncertainly. But, how information is structured rather than what it conveys is a direct function of its potential for uncertainty reduction. One approach to dealing with information to reduce uncertainty is to format and structure it via standards. Standards homogenise information architecture and make the world more ordered. In a world of growing interconnections between business entities, production processes and decision makers, information standards act as lubricant. But, increases in standards are not just driven by globalising business processes and the tightening of global supply chains. There is also today a growth in demand for accountability and transparency of organisational processes.

As global interconnections grow, risks are perceived to rise because interactions between transaction points increase the uncertainty of effective execution. Standards help organisations and individuals to manage risk and thereby proffer accountability.

The World Economic Forum founder Klaus Schwab reports in Global Risks 2010 that ‘we are in a world with unprecedented levels of interconnectedness between all areas of risk.’

This is regarded as significantly shaping the risk management strategies of global firms or those affected by globalising forces.

This is because an increase in interconnections among risks implies a higher level of systemic risk. The correct response to this is regarded as more effective global governance structures.Key risks at a global level today include fiscal crises, high unemployment, under-investment in infrastructure as well as cybersecurity risks, asset price collapse and the possibility of lowering economic growth in China. What is essential for the finance professional to realise is not simply that risks need to be assessed, but also to develop a close awareness of interconnections between risk categories.

5. Technology, work content and style Cross-national comparisons of management styles and organisational practices are indicative of differences which suggest country-based specificities. But, just as some characteristics seem to be more prevalent among organisations in particular countries, so there is evidence that clusters evidencing cultural commonalities exist which overarch country-specific characteristics. Researchers have also reported that cultures which make high use of information communication technologies (ICT) tend to exhibit polychronic work styles - performing multiple activities in parallel - as opposed to bending toward monochronic functions.

There is growing evidence that the availability of constant access to computers, networks and technologies enhances the tendency toward polychronic behaviour.

Indeed senior managers operating in high tech contexts and overseeing the activities of more junior tech-savvy managers often complain about the very extensive polychronic style of subordinates.

In a global context where work is outsourced from Eastern Europe to the Far East and many of these countries have younger populations that are being fast educated in ICT, it is likely that polychronicity will grow in presence as a preferred work style. Consequently, the finance professional will exhibit a need for information that is continuously derived and streamed from different sources with attention being divided across a mosaic of information output windows.

Also, managers operating in a highly digitised environment tend to be more receptive to collaborative working approaches rather than command and control work styles. Trust and visibility are given a high degree of significance as is the predilection for interacting and interfacing. Consequently, such managers need constant real time feedback about their activities. Performance evaluation systems, including accounting and financial metrics based evaluators, will need to reflect this trend. Information systems that produce output which is qualitative, quantitative, graphical, interactive, text based and which shows varying degrees of structure will need to be developed and invested into. The impact on both the work content and work style of finance specialists is likely to be extensive.

6. Today’s new reality The finance function must today address novel ways of appealing to information. It must address altered platforms, sources and architectures relating to information output, channels, structures and modes of assessment. The sources of change are as multifaceted as are the effects. The novel global economy is affected by macro and micro level changes. Governmental actions are influencing the manner in which enterprises access finance, make use of it, report it and monitor the risks of their economic activities. Likewise, individual information users are changing the type of information they assess, access and the style with which they act on information.

The management accounting body of expertise which has over the past two decades undergone significant changes is again at the brink of seeing immense shifts in content, structure, mode of delivery and approach to usage. Whilst planning for tomorrow has always been of concern to finance professionals, planning for the fast changing today is now equally important.

Use of CIMA member acronym In view of the look-alike usage of our letters ACMA and FCMA in Sri Lanka, our members are reminded to use the letters ‘UK’ after ‘ACMA’ and ‘FCMA’.

Bradley Emerson, Regional Director - South Asia and Middle East, CIMA.

feature article CIMA Sri Lanka evening discussion on 2011 budget highlights The 2011 budget proposals consistently portrayed the government’s strategy to facilitate economic development by encouraging private sector investment. Increasing government revenue though simplified tax systems and utilising these funds for infrastructure development is the underlying strategic framework used by the government to accelerate economic development.

1. An overview of the 2011 budget proposals The keynote by Dhammika Gunatilleke, Tax Advisor to the Ministry of Finance provided insight to the private sector incentives such as the removal of nuisance taxes, and exemption of VAT/NBT for software development industry related investments to build a knowledge economy.

2. Revenue proposals of the 2011 budget Lakmali Nanayakkara, Partner of Ernst and Young, deliberated about the revenue proposals of the 2011 budget.

Industry affected Financial services and banking Financial services and banking Telecommunication

All industries excluding liquor, tobacco related industries and casino’s Tourism, transshipment, export, construction and all companies with profits less than Rs. 5million N/A

Type of tax affected VAT

Previous rate 20%

New rate 12%

% change (40)

Overall effective tax rate VAT, cellular mobile subscribers levy and environmental conservation levy replaced with a single ‘telecommunic ation levy’ Corporation tax

65%

45%

(31)

N/A

20%

N/A

35%

28%

(20)

Corporation tax

15%

12%

(20)

Maximum income tax rate (personal)

35%

24%

(31)

Increasing the tax free allowance from Rs. 300,000 to Rs. 500,000 is another significant tax concession granted to individuals.

The government has taken significant steps to encourage value added exports by increasing the Cess on bulk and semi-processed tea and rubber, whilst granting a concessionary rate of duty for value addition of more than 65% and for exports carrying the ‘Sri Lankan’ brand.

In the capital market sector, relaxing foreign exchange controls to encourage investment in unit trusts, withholding tax on corporate debt securities being treated on par with government securities and capital gains continuing to be tax free further reiterates the need for capital expansion for private investment.

3. The business impact of the 2011 budget proposals Trevine Jayasekera, Group Finance Director of Brandix Lanka Ltd., addressed the business impact of the 2011 budget. Continued encouragement to the private sector is evident through the budget allocation for capital expenditure. Entrepot trade, production of value added and branded products, software development and business process outsourcing (BPO) are some the key business opportunities that may be exploited by the private sector. Considering the duty concessions, businesses can consider to set-up shopping malls for electronic items targeting tourists.

Some of the key challenges to the private sector include tea and rubber industries having to strive towards increased value-addition and branding, attracting the required technical skills from local and international sources and having to reduce dependency on migrant worker remittances. Formulation of consistent government policies to locally retain skilled labour is a need of the hour.

Figure 1: Analysis of government expenditure (actual figures)

Source: Ministry of Finance * Note: actual cost of amortisation is not available for 2010

4. Macro economic impact of the 2011 budget proposals Dr Anila Dias Bandaranaike, Former Assistant Governor of the Central Bank of Sri Lanka deliberated on the macro economic impact of the 2011 budget proposals.

It is commendable that the current budget is ‘forward looking’. The consistent reduction in inflation, stability of the exchange rate and increased steps taken to enhance private sector credit is also to be appreciated.

The government targets to increase economic growth from 8% to 10% and enhance investments from 32% to 35% of GDP. Policy priorities to meet 2011 targets include: increasing private investment, increasing productivity through performance related pay, eliminating non-value adding expenditure and focusing on continued North and East revival.

feature article The negative signals include: the state taking over key business areas such as gas, insurance and air travel, and the inability of the government to meet revenue and expenditure targets.

The increasing state debt is an area which required sound management. Further, government’s continued commitment is required to better manage recurrent expenditure through performance related pay schemes and rationalisation of incentive schemes of government servants - as 40% of government revenue is utilised to pay government sector salaries.

Nilanthi Sivapragasam, Chief Financial Officer of Aitken Spence Plc, commented that the budget speech was development oriented, and focused on broadening the tax base while eliminating nuisance taxes.

She also commented that the reduction in taxes in the financial sector should result in improved borrowing rates for private sector firms.

Sentiments expressed by the audience highlighted the need for the private sector to exploit opportunities in the north and east parts of the island and the need for the government sustain its stance on the favourable revenue proposals targeting economic growth.

Certain macro economic targets of the government may not be realistic as some of the budget estimates seemed ‘over optimistic’. Therefore, a streamlined mechanism of reconciliation between targets and outcomes has to be performed with appropriate control action being taken.

Figure 2: Analysis of recurrent expenditure in relation to government revenue (actual figures)

Left to right: Nilanthi Sivapragasam, Dr Anila Dias Bandaranaike, Lakmali Nanayakkara, Manil Jayesinghe, Ranjith Samaranayake, Trevine Jayasekera and Dhammika Gunatilleke.

What is ‘Double Entries’?

Source: Ministry of Finance

'Double Entries' newswire is the oldest online accounting newswire in the world. Their aim is to provide ‘the’ information filter to the internet for those interested in academic accounting.

5. Highlights of the panel discussion

They disseminate a free weekly email newswire that provides the latest accounting related news from around the world.

An insightful panel discussion succeeded Dr Bandaranaike’s deliberation, where experts in key industries joined the eminent speakers. Manil Jayasinghe, Chairman of the Technical Committee who moderated the panel discussion drew opinions of the industry experts on the specific impact to the banking and financial services sector and the hospitality sector.

Ranjith Samaranayake, Executive Director/Group Financial Officer of Sampath Bank spoke about the key benefits offered to the financial/banking sector which included the following.

Reduction of minimum dividends payable from 25% to 10%.

Increasing capital adequacy of banks by introducing a new Investment Fund Account created by the Central Bank of Sri Lanka. Banks contribute 8% of value addition calculated for VAT on financial services and 5% of the adjusted profit for income tax purpose. These funds are to be used as long-term credit and are to be dispensed at low tax rates.

Overall reduction of effective taxes in the industry. This will increase banks’ lending capacity facilitating economic growth.

While it is based in the UK, its community membership extends widely with 75% of its members coming from outside Europe.

Their key offers are community web presence and a bi-weekly newsletter.

Their members include accounting educators, researchers, practitioners and students. Their e-community network is free to join and has a total of 5,000 subscribers and approximately 15,000 unique visitors to the website per month.

Sign up now for their free weekly email newswire If you like to sign-up to receive ‘Double Entries’ please complete the online form at www.accountingeducation.com/newsletter.cfm The launch of the first issue, sponsored by CIMA, was distributed on 1 December 2010.

feature article Organisational culture and its impact on performance

by Dharshan Cooray 1. Introduction This article aims to address the key aspects of organisational culture and its impact on performance in a global context.

Further, the article extends to apply some of the key concepts to the Sri Lankan businesses environment through the use of few case studies.

feature article

2. Elements of organisational culture E A Schein, a renowned writer on organisational culture defines it as a pattern of shared basic assumptions developed by a given group as they learn to cope with problems of external adaptation and internal integration. These have worked well enough to be considered valid and therefore, are to be taught to new members as the correct way to perceive, think and feel in relation to those problems.

The culture of an organisation will ultimately take the key learning from its past business experiences to develop a basis for future decision making.

In a systems/process based culture, key learning of a particular time frame or an order-cycle will be incorporated into future processes and decision making. This is a method used in garment export firms where key learning from a season are analysed when planning for the next season’s customer orders.

Another factor influencing organisational culture is the vision or the purpose of an entity. A company’s aspired market position in 20 years will determine the extent to which its employees need to work to facilitate the company’s growth. This will impact the motivation levels of staff; processes and resources used in the respective organisation; and will contribute towards formation the organisational culture.

Organisational structure is also a vital element that determines culture. Management styles, authority granted to managers and methods used to manage staff will be a key determinant of the culture prevailing in an organisation.

Charles Handy links organisational culture to structure of a firm. A large hierarchical firm may have a ‘role culture’ where people may have specified ‘roles’ or jobs to perform. ‘Following rules’ or operating according to specific guidelines or processes can be seen in these organisations. A ‘power culture’ may be seen in firms dominated by few individuals, i.e. the CEO or few directors.

A ‘task culture’ will prevail in a firm where team centered task completion is given priority. Authority is delegated to ‘task’ focused teams.

On the other hand a ‘person culture’ will be individualistic and will be created based on delegation of authority to individuals working with minimal supervision, i.e. a marketing manager working in an overseas branch.

Another key factor that determines the culture of an organisation is the industry in which it operates. A product or service requiring a high level of customer service such as the telecommunications industry, transport and distribution related industries (courier, freight forwarding and shipping firms) will operate based on ‘work-hard: play-hard culture’ as defined by Deal and Kennedy.

It reflects high volumes of work, a culture of teamwork and an ‘enjoyable place to work’. Employees may take lower calculated risks in these firms.

A ‘process culture’ is associated with bureaucratic structures, where concentration is on ‘how things are done’ rather than ‘what has to be achieved’. Industries where such cultures could be seen include certain large scale firms governed by conventional management styles and certain public sector organisations.

3. Impact of culture on organisational performance The CIMA executive summary on Human resource policies, accounting and organisational performance (2009), examined the relationship between human resource management (HRM), management accounting and organisational performance through detailed study of six companies and telephone interviews. This included study of two companies from Canada, two companies from Japan and two companies from the UK; and 100 telephone interviews across 40 companies in Japan, 30 in Canada and 30 in the UK. The six case studies covered building materials, consumer products, electronics, software development, timber products and a utility company.

All six cases used a mix of financial and non-financial performance measures including the following.

Case A: achievement of budget, growth, market share and sales per employee.

Case B: cash flow, customer satisfaction, economic value added (EVA - a registered trade mark of Stern, Stewart and Co.), morale, social contribution and sustainable growth.

Case C: customer satisfaction, economic value added, productivity, quadruple bottom line, quality and safety.

Case D: delivery, environment, productivity, return on net assets and safety.

Case E: cash flow, customer satisfaction, delivery, quality and sales.

Case F: customer service, profitability, safety and total shareholder return.

In summary, the outcome of the study showed the below key points affecting culture.

Viewing employees as ‘assets’ rather than ‘costs’ will improve employees’ sense of belonging to the organisation increasing long-term performance.

Teamwork established through cross functional teams enhanced performance levels in an organisation.

Culture impacts performance of an organisation, and creating the right culture to suit the respective industry and employees will increase organisational growth.

Table 1: Impact of organisational culture on performance Major impact

Strongly

on the organisation’s performance

Disagree

Neutral

Agree

Strongly

Total

disagree

Canada

0

3

5

8

14

30

Japan

0

0

6

21

13

40

UK

0

2

9

14

5

30

Total

0

5

20

43

32

100

agree

feature article As illustrated in Table 1, 75% of the telephone interviewees agreed that culture impacts organisational behavior.

Further, the analysis of the case studies concluded that the below factors were aspects of ‘good’ or positive culture.

Open communication Low absenteeism Good union relations Excellent employee relations One team (family) culture 4. Impact of culture on organisational performance in the Sri Lankan context Culture and its impact on organisational performance will have to be determined based on the industry type (office/factory) and structure of the firm. In a retail organisation such as Cargills (Ceylon) Plc, a performance driven culture based on delivering customer requirements is accepted by staff, and in turn results in alignment of corporate mission to staff objectives. Organisations of this nature where direct contact with the end customer is critical would benefit from such an approach. This has to be backed by instilling teamwork based culture and appropriate staff; and flexible, customer requirement based systems and processes.

Senior and middle management that facilitate customer oriented and goal focused attitude support servicing of customer needs. Delegating staff with the required levels of authority to take timely calculated decisions in response to market demand can be seen in these firms. (Business and financial section of the Daily News.)

A common issue faced by firms of this nature is that a ‘process culture’ as defined by Deal and Kennedy may get gradually adopted. If that happens, people may tend adhere to processes rather than achieving value for the shareholders and customers. Conducting periodic assessments to align objectives and processes will help to avoid such situations.

In certain highly volatile and competitive industries such as garments, telecommunication and logistics, a proper assessment of the workload and pressure that employees could handle based on the level of motivation, career aspirations and personality type are not conducted.

Sometimes there is no formal system of assessment through employee consultation. This could lead to employee de-motivation resulting in a negative impact on organisational performance.

In factories and mass production based operations where productivity and lean manufacturing are key performance indicators, a culture consisting of clear processes and systems could be evident. A performance driven culture with incentive schemes are commonly seen in this environment. A learning based team working culture is implemented in this environment in order to motivate employees through providing awareness on customer requirements, and how the total value chain is designed to meet the final objective of the organisation.

These are non-conventional methods of factory staffing. A culture of learning through operational worker experiences, listening and resolving day to day issues focusing on total quality management and continuous improvement constitute elements of an ‘operational’ culture. Certain small and medium scale Sri Lankan operations engaged in manufacturing and retail have benefitted through leadership that has enabled a high performance culture. Examples of such cases include Odel, House of Fashion, Siddalepa and the Nawaloka group of companies.

Having the right orgnisational culture will motivate employees and will ultimately drive superior performance. Further, culture plays an important role not only in driving improved performance, but, it also helps to establish an appropriate performance management system within the organisation. A CIMA research update (March 2008) identified that the following factors have a significant impact on performance management.

Fair targets Targets should focus on both short and long-term objectives.

In setting targets, managers should discuss what is achievable and what is a ‘wish’ list. This distinction should be clear.

Regular target reviews Frequent dialogue between junior and senior managers should be encouraged. If operating conditions change and targets become impossible to achieve, objectives should be assessed.

Personal contact Appraisals play a pivotal role in measuring performance but should not be used to blame staff. If employees are dissatisfied, they are less likely to be motivated to do their best for the organisation.

Performance evaluation This should include competency and training and development, not just focusing on whether operational targets are met.

Trust When employees trust their managers, they are more committed to achieving their targets. Increased absenteeism and scepticism can result from stressed employees.

The above factors are pivotal in the Sri Lankan context where, systematic and transparent measurement systems are often overlooked; performance reviews are considered to be compliance requirements rather than being strategic opportunities to encourage employee engagement and longterm commitment to the firm.

5. Conclusion In conclusion it is necessary to evaluate the impact of culture on motivation. As shown above a positive culture results in increased motivation and enhanced performance.

Job satisfaction is the single most important factor affecting employee retension as shown by Derensky (2008).

Therefore, it is necessary to formulate a culture focusing on long-term retention of employees.

Tharanga Thilakasiri (2010) identified the most common reasons for attrition to be as follows: a job not being what was expected by the employee in terms of the nature of work and responsibilities personal skills and personality not matching requirements of the job lack of growth opportunities within the job role inability to manage stress and work-life balance lack of appreciation by superiors lack of trust in superiors and co-workers.

It is necessary to formulate an overall corporate strategy considering the above factors, focusing on teamwork, learning and growth, flexibility and pleasant working conditions. This will establish a positive culture that will enable long-term sustainable growth of an organisation.

A renowned business leader Rajendra Theagarajah, Chairman/CEO of Hatton National Bank Plc in his deliberation at the CIMA Technical Symposium 2010 spoke about focussing on a culture of knowledge gathering and sharing, which results in the development of ‘holistic individuals’. This results in a knowledge workforce creating optimal value to the end customer.

career tips The glass ceiling: strategic tips for career progression Background The corporate world that has traditionally been male dominated now sees increased female representation year on year. Yet, female participation at top-management level still has room for improvement - as according to the International Labor Organisation (ILO), men still occupy majority of management, top executive, and higher levels of professional positions, whilst, women are still concentrated in the lower categories of 1 managerial positions .

Strategies for career success CIMA interviewed several successful women leaders across the world to identify what worked well for them in career progression. The key 4 strategies that were identified are given below .

Seeking support from mentors and coaching opportunities o Seek out mentors and other senior colleagues who will support your career and help you progress. o Choose the mentor carefully, ensuring it’s somebody you can trust and who can empathise as well as advise. o Consider a female mentor for support in overcoming gender barriers. o Join female support networks. o Find out about coaching opportunities. o Offer yourself as a mentor to more junior staff.

Value of gender diversity at top management The right mix of gender balance in the board and senior management derives numerous benefits to a business.

Better financial performance A recent survey conducted by McKinsey and Co. found that gender diversity in leadership has a link to better financial 2 performance . Therefore, organisations need to celebrate the different leadership styles that women and men offer and help 3 women leverage their unique strengths .

Consider raising your profile o Be assertive and ask for what you deserve. o Be proactive – speak up about your career ambitions and keep a log of your successes. o Network widely to make yourself known. o Play on your strengths and don’t feel the need to emulate male colleagues. o Improve your communication and presentation skills. o Seize new responsibilities and opportunities.

Diversity in decision making Diversity in knowledge, experience and attitudes are essentials for rounded decision making. Having too many senior leaders that are ‘alike’ could result in group-think at board level. By contrast, diverse executive teams consistent of a good gender balance are more likely to innovate and thrive.

Always be true to yourself o Decide what success means to you and identify your career goals. o Find a leadership style you’re comfortable with. o Find ways to manage stress. o Take steps to stay physically and mentally healthy. o Find the right balance between work and home.

Better market performance Companies that include women in top management gain a significant competitive advantage by being able to understand and relate to diverse customer needs and market segments.

Better risk management Research indicates that men are likelier to make riskier decisions, 4 especially when under pressure and surrounded by other men .

Therefore, a balanced senior management team will take calculated risks that are well thought-through.

Barriers to female career progression Some of the key barriers encountered by women leaders in climbing the career ladder include the follow.

The female double burden Female leaders are challenged an extra mile with constant struggle between work and heavy domestic responsibilities such as maternity, child-bearing, organising family life and care for the elderly.

Traditional corporate models While numerous social policies are introduced in favour of women employment, the businesses still operate on a corporate model that was historically designed by men which provides the pillars on which the glass ceiling is supported. One such key model is the ‘anytime – anywhere’ expectation of individuals holding senior positions, which equates to leadership with 5 unfailing availability and total geographical mobility at all times .

Direct or indirect gender discrimination Direct discrimination has been extensively addressed through education programs, labour laws and inclusivity initiatives.

Therefore, nowadays it’s almost an uncommon encounter.

However, prejudices and stereotyping of women still exists in the business world. CIMA’s recent research on breaking the glass ceiling identified that most women felt that they had to exert extra effort to be in par with their male counterparts. For examples, many female leaders had to prove their worth in the board for 4 them to be taken seriously .

Organise yourself and your career o Plan your career path in detail - focusing on short-term and longterm goals. o Make plans for all eventualities. o Prioritise your daily tasks and delegate where appropriate.

Conclusion Men and women lead differently but their different leadership styles and traits complement each other. So, find what works for you best and stay focus on your career at all times.

1

Breaking through the glass ceiling: women in management, ILO, 2004.

Moving women to the top, McKinsey & Co., 2010.

3 Why women mean business: understanding the emergence of our next economic revolution, Wittenberg-Cox & Maitland, 2008.

4 Breaking Glass: Strategies for Tomorrow's Leaders, CIMA, 2010.

5 Women matter: gender diversity, a corporate performance driver, Desvaux, DevillardHoellinger, & Baumgarten, 2007.

2

Chartered Institute of Management Accountants Sri Lanka division Colombo office 356 Elvitigala Mawatha Colombo 5 T. +94 (0) 11 250 3880 F. +94 (0) 11 250 3881 E. colombo@cimaglobal.com www.cimaglobal.com/srilanka