Mini Research Project_Group One_The Impact of Credits to SMEs on Employment Generation

Mini Research Project



THE IMPACT OF CREDITS TO SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) ON EMPLOYMENT GENERATION



BY



GROUP ONE




BEING AN ABRIDGED RESEARCH STUDY PRESENTED TO THE DEPARTMENT OF BUSINESS AND ECONOMICS IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE AWARD OF A MASTER’S DEGREE

IN INTERNATIONAL BUSINESS AT LINCOLN UNIVERSITY CALIFORNIA, USA.


MAY 29, 2010


CERTIFICATION

I, the undersigned, certify that I approve this research work as being adequate in scope, depth and quality, in partial fulfillment of the award of a Master’s Degree (MBA) in International Business in the Department of Business and Economics at the Lincoln University, California.







________________________________

PROF. SYLVIA SCHOEMAKER

(Project Instructor)




TABLE OF CONTENTS

Title page- - - - - - - - - i

Certification- - - - - - - - ii

Table of contents - - - - - - - iii

List of Tables and Graphs - - - - - - iv

Synopsis- - - - - - - - - v



CHAPTER ONE - INTRODUCTION

1.1 Prologue- - - - - - - -

1.2 Background to the Study- - - - -

1.3 Statement of the Problem- - - - -

1.4 Relevance of the Study- - - - - -

1.5 Objectives of the Study - - - - -

1.6 Statement of Hypothesis- - - - -

1.7 Scope and Methodology of the Study- - -

1.8 Limitations of the Study- - - - - -

1.9 Organization of the Study- - - - -

CHAPTER TWO: SURVEY OF LITERATURE

2.1 Introduction- - - - - - -

2.2 The concept of Small and Medium Scale

Enterprises (SMEs)- - - - - -

2.3 The Concept of Finance-- - - - -

2.4 Generating Employment though Promotion of

Small Scale Industries- - - - - -

2.5 Expected Role of SMEs in Industrial

And Economic Development- - - - -


CHAPTER THREE: THEORETICAL FRAMEWORK AND

MODEL SPECIFICATION

3.1 Introduction- - - - - - -

3.2 Sources of Finance for SMEs- - - - -

3.3 The Roles of SMEs in National Development- -

3.4 Constraints of SMEs in Nigeria- - - -

3.5 Alternatives to SME Growth - - - -

3.6 Model Specification- - - - - -

CHAPTER FOUR: ANALYSIS AND INTERPRETATION

OF REGRESSION RESULTS

4.1 Presentation of Regression Results- - - -

4.2 Definition of Concepts- - - - - -

4.3 Interpretation of Results- - - - - -

4.4 Policy Implications- - - - - -


CHAPTER FIVE: OBSERVATIONS, RECOMMENDATIONS AND CONCLUSIONS

5.1 Observations- - - - - - -

5.2 Recommendations- - - - - -

5.3 Conclusion- - - - - - - -

Bibliography - - - - - - --

LIST OF TABLES AND FIGURES

TABLES

1 Investment and Employment Capacity

in Selected Countries- - - - - -

2 Data obtained for the Analysis- - - -



SYNOPSIS

This research work is an Econometric analysis of the impact of credits to small and medium scale enterprises on employment generation. Though, this credit provision particularly refers to those made by Banking Institutions. Since inception, it was revealed in this study that, SMEs in Nigeria have witnessed stunted growth and therefore deprived of development due to the unavailability of funding.

The study appraises the numerous efforts made by government and its agencies at developing SMEs. This includes the recent programme known as “small and medium scale industries equity investment scheme (SMIEIS) “all of which have yielded less than expected results. However, this study has depicted the various roles played by SMEs in developing economies like Nigeria.

On employment generation, the work shows that bank credits to SMEs cannot be held accountable for employment growth in employment in Nigeria; this is particularly due to its failure to meet with a priori expectation. It will also be discovered that in the specified model, there is no significant linear relationship existing between the explained (dependent) and explanatory (independent) variables. This goes to prove that the results obtained from empirical evidence are short of expectations.

Nonetheless, the reasons for embarking on this study are achieved particularly as it will be discovered that SMEs have the potential for sustaining growth and developing the Nigerian economy

In the course of the study, there were observations upon which recommendations are thereby made to ensure that the future of Nigerian SMEs is nothing short of expectations.



CHAPTER ONE

INTRODUCTION

1.1 Prologue

The advent of the recent emphasis on the promotion and development of SMEs, was preceded by an unreasoned notion that only large scale enterprises are the bedrock of any modern economy. In Nigeria particularly, this ideology dominated the scene prior to the 1980’s, due to the basic tenets of “Economics of large scale production” and its attendant merits.

Then, small – scale industries (SSIs) were believed to be outmoded and an indication of the existence of technological backwardness, so much that the rapid decline in the existence of SMEs for large scale industries became an index for industrial progress.

1.2 Background to the study

It is evident that the economic conditions that prevailed in Nigeria during the 1970s and the early 1980s required the adoption of industrialization strategies based on large scale production. This derives from the fact that numerous large scale industries were set up during the rehabilitation programme of the post – war era. These industries tended to be capital intensive. The capital requirement and technical manpower were largely imported and this impacted negatively on Nigeria’s Foreign exchange earnings.

Therefore, in respect of the weaknesses associated with large scale industries in Nigeria, the government has of recent sought to promote the small – scale industry as a panacea strategy for a self – reliance and sustained economic growth. This must have been the reason why the third National development plan clearly incorporated the development and promotion of small scale industries particularly for the objective of creating employment opportunities.

1.3 Statement of the problem

This research work was based on the paucity of funds and credit availability to help develop small and medium scale enterprises and sustain existing ones.

1.4 Relevance of the study

This research work is necessitated by the fact that all institutions concerned need to realize the important roles SMEs can play in economic growth. The study is an attempt to enlighten and sensitize stakeholders that the inherent lapses and complexities associated with large scale businesses should encourage interest in SMEs.


1.5 Objectives of the study

On the one hand, this research work, seeks to analyze;

1) What a small and medium scale enterprise means.

2) The roles played by SMEs in a developing economy.

3) By empirical evidence, the effect(s) of credits to SMEs on employment generation.

4) The problems and prospects of SMEs.

On the other hand, this study seeks to assess;

(i) The efforts made by banks and non – bank financial institutions at promoting and sustaining SMEs in Nigeria.

(ii) The rate of credit availability to SMEs in Nigeria.

Moreso, this study shall make observations and necessary recommendations based research findings.

1.6 Statement of hypothesis

The findings to be arrived at in this research work shall be on the basis of the hypothesis formulated as follows:

H0: Bank credits to SMEs generate employment in Nigeria.

H1: Bank credits to SMEs do not generate employment in Nigeria.

Notes:

H0: Is the null hypothesis, a tentative statement that this work seeks to validate or invalidate.

H1: Is the alternative hypothesis, which in automatically accepted once the null hypothesis is rejected.


1.7 Scope and methodology of the study

1.7.1 Research methodology

This study shall be based on multiple regression analysis using the Ordinary Least Square (OLS) method of estimation. The data input for the analysis shall be secondary and shall be obtained from relevant institutions.

1.7.2 Scope of the study

This research work covers small and medium scale industries in Nigeria, the credit provision for SMEs shall be restricted to those provided by commercial and Merchant Bank between 1991 and 2000. It shall also be based, mainly, on post – Structural Adjustment Programme (SAP) period particularly with regards to the data input for the regression analysis so as to enhance the manageability and reality objective of the econometric study.

1.8 Limitations of the study

This study may be short of its expectations due to the inevitable nature of evident constraints in the study. Foremost, time insufficiency shall be a major factor that will hamper the heights intended for this research work. So also is the paucity of funds may also impede effectiveness of outcomes

Finally, the results of this study may fall short of expectations due to the unavoidable presence of some errors; pertaining to errors of model misspecification, omission, randomness and measurement.

1.9 Organization of the study

The study has been broken down into five chapters earmarked as follows.

1) Chapter one introduces the study, defines the scope, identifies the relevance, stipulates the research methodology to be used and sets the goals and objectives of the study.

2) Chapter two attempts a review of existing literature by assessing and evaluating the study within the framework of previous research works.

3) Chapter three is the theoretical framework of the study, which also embeds the specification of econometric models for an empirical analysis of the study.

4) Chapter four seeks to proffer a meaningful explanation and interpretation of results obtained from the econometric analysis.

5) Chapter five makes observations, recommendations and proffers some solutions to the problems encountered in the course of the study.



CHAPTER TWO

SURVEY OF LITERATURE
2.1 Introduction

To ensure a proper evaluation of the requirement of this project work, a review of existing literature was deemed necessary.

2.2 The concept of small and medium scale enterprises (SMEs)

The definition of what an SME is varies among individuals and regions.

According to the United Nations Industrial Development Organization (UNIDO) 1987, there is no rigidly universally acceptable definition of a small scale industry. These variations arise from differences in the industrial organization in countries at different levels of economic development.

Therefore, it becomes quite obvious that defining SMEs will be a subjective exercise in that it will be subject to domestic economic conditions prevailing within a given country or territory. (Ogbe N. E.) 1995.

However, various authors, entrepreneurs and agencies have attempted a definition of a small and medium scale enterprise (SME).

Scarborough and Zimmerer (1985) defined a small scale enterprise as a business, which is independently owned and operated, and it is not dominant in its field of operation. To them, small scale businesses employ 500 people or less and must meet the following criteria.

1) Independent management.

2) Capital is supplied and owned by few individuals.

3) Area of operation is mainly local but market need not be local.

4) Size of turnover is relatively small.

Baumback (1982) sees an SME as that in which owners and managers are able to recall names of employees. Olabiyi (1994) asserts that an SME may or may not be incorporated. The central bank of Nigeria (CBN) circular No. 28 of 1998 defined a small scale enterprise as that in which total investment will not exceed N 500,000 and the annual turnover will not exceed N 5,000,000.

2.3 The concept of Finance

Foremost, finance as a discipline is not new. Though, it used to be a part of Economics. By definition, finance entails the acquisition and effective utilization of funds in order to enable a firm attain its business objectives which may include; output maximization, profit maximization, cost minimization, cost minimization (Eriki, P. O.) 1999.

2.4 Generating employment through the promotion of SMEs

The 1989 industrial policy instigates that the major policy tool through which government plans to enhance employment is the promotion of SMEs. A lot of measures have been put in place by government, these include the establishment of NDE in 1986 and maximizing private sector employment through the creation of such organs as industrial development centers (IDCs) and industrial training Fund (ITF).



CHAPTER THREE

THEORETICAL FRAMEWORK AND MODEL SPECIFICATION

3.1 Introduction

The issues pertaining to the small and medium scale enterprises have witnessed emphasis short of expectations. The SME’s sector is no doubt a vibrant sector that has the potential of eliminating or at least reducing the structural rigidities inherent in the macro economy.

3.2 An evaluation of some SMEs financing programs in Nigeria

In order to encourage the growth of small and medium scale enterprises, successive administrations have over the years employed; monetary, fiscal and industrial policy measures at the macro level and financing arrangements at the micro level, to assist the development of SMEs in Nigeria. These, inter alia, include;

1) Providing local finance through its agencies such as the Federal Ministry of Industry, Central Bank of Nigeria (CBN), Nigerian Industrial Development Bank (NIDB), and Nigerian Bank for Commerce and Industry (NBCI), Nigerian Export Import Bank (NEXIM), etc.

2) Facilitating and guaranteeing external finance through the World Bank, African Development Bank and other multilateral institutions willing and capable of assisting SMEs.

3) Setting up the National Economic Reconstruction Fund (NERFUND), which was a source of medium to long term local and foreign loans to SMEs.

Generally, the outcome of these funding arrangements in support of SMEs in Nigeria are reviewed and appraised below.

3.2.1 Small scale industries credit scheme (SSICS)

The Federal Government under the auspices of the federal Ministry of Industry, in 1971, set up a small industry development scheme (programme) to provide technical and financial support for SMEs.

3.2.2 Central Bank of Nigeria (CBN)

The apex regulator of the banking system plays a crucial role in this area


3.2.3 The small and medium industries equity investment scheme (SMIEIS)

This happens to be the most recent development with regards to financing SMEs, where all banks in Nigeria are required to set aside 10 percent of their annual profit before tax for equity investments in small scale industries (SSIs). Likely impact of the initiative are;

1) Boosting or elaborating SME financing

2) Facilitating access to the capital market

3) Stimulating activities in the sub-sector

4) Improving operations management practices

5) Reducing the rate of default.


3.2.4 The Bank of Industry (BOI)

This is the recent result of the conglomeration of the three major institutions that aid the funding of industries. As a result of the problems that bedeviled NERFUND, NIDB, and NBCI in the 1990s, the federal government under the auspices of the federal ministry of industry has succeeded in restructuring these institutions. The outcome of which is a merger into a new organization known as the Bank of industry (BOI) in 2002. The institution has made tremendous contribution to the SME sector since its inception


3.2.5 The Capital Market

The Nigerian capital market was overhauled to deal with the bias associated with the market in favour of large enterprises. This led to the establishment of the second tier security market (SSM) in 1985 to assist small and medium sized indigenous enterprises to access the capital market for long term funds.

3.3 Sources of Finance for SMEs

SMEs can access funds from both the money and capital markets

3.3.1 Employment Generation

The flexibility and adaptability of SMEs to changes and challenges of the Nigerian economy coupled with the fact that they are predominantly privately owned, makes the SMEs a major sector for sustainable growth and employment generation in the economy. They provide employment opportunities more than the large firms and they can account for up to 90% of employment in most economies of the world including Nigeria.

3.4 Model specification

This research work seeks to analyze the impact of SMEs’ funding on the generation of employment. To carry out the empirical evidence, the model to be utilized is presented as follows:

EMPL = F¬ (CBCR, MBCR, GDP).

Specifying the model in natural log form:

InEMPL = InB0 + B¬1¬ InCBCR + B2 InMBCR + B3 InGDP+ 

B01 > 0 B11 > 0 B21 > 0 B31 > 0

Where EMPL = Employment rate

CBCR = Growth in Commercial Bank

credit to SMES

MBCR = Growth in Merchant Bank

credits to SMEs

GDP = Growth in Gross Domestic

Product

 = Stochastic term



CHAPTER FOUR

ANALYSIS AND INTERPRETATION OF REGRESSION RESULTS

4.1 Presentation of Regression results

Based on data between 1991 and 2000, using the OLS method of estimation, the regression results obtained appeared spurious and suggested the presence of autocorrelation. The estimated results are presented as follows:

InEMPL = 1.13 – 0.14 InCBCR – 0.037 InMBCR +

(3.91 (–3.85) (–0.54)

0.38 InGDP

(2.51)

R2 = 0.791

F (5, 2) = 6.302

SEE = 0.032

Mean of Dependent Variable = 1.079


U = –0.29*  - 1 + 0.443* u – 2 + E

(–0.53) [0.624] (1.14) [0.317]

4.2 Definition of concepts

R2: This is the coefficient of multiple determination. It reveals the proportion of the explained or dependent variable that is explained by the explanatory or independent variables in the model.

F – Statistic: - This is used to test for the overall significance of the model. It depicts how much the explanatory variables taken together have affected the explained variable.

T –Statistic: - These are used to test for the individual significance of the explanatory variables.

SEE: - This is the standard error of estimate revealing the deviation of actual values from the expected values.


4.3 Interpretation of results

The three explanatory variables have been able to explain 94% of the systematic variations in employment rate during the 1991 – 2000 period. This proves that model has a good fit. The F – Statistic of 6.302 is statistically different from zero both at 1% and 5% levels of significance. The result implies that there is no significant linear relationship existing between the explained variable and the explanatory variables.

The signs of two of the explanatory variables are not in conformity with a priori expectation. However, the slope coefficient of GDP is in conformity with a priori expectation in that a 10% change in GDP results in a 4% change in employment rate, the result is fairly elastic. The t – statistic shows that GDP has a significant impact on employment generation at 5% levels of significance. GDP also passed the test at 10% levels. The Durbin Watson result of 1.75 shows the absence of serial correlation among the explanatory variables. Finally, an assessment of the predictive power of the model, using the ratio of SEE to the mean of dependent variable, shows that the model is a weak predictor of employment rate.


4.4 Policy implications

From the regression results, it can be deduced that funds provided by commercial and merchant banks to small and medium scale enterprises (SMEs) cannot, in its strict sense be held accountable for increase in employment rate. Given this, government should embark on strict policy measures that will generate employment. For instance, the equity Investment Scheme (SMIEIS), which requires banks to invest 10% of their annual pre-tax profits on Equity investment of SMEs is a good one. In addition, government should ensure output is raised throughout the economy by encouraging business investment and embarking on viable expenditure programs that will increase economic output (GDP) since it has the potentials of enhancing employment based on results obtained in the study.


CHAPTER FIVE

OBSERVATIONS, RECOMMENDATIONS AND CONCLUSION

5.1 Observations

This research work has analyzed the existence of a relationship between employment rate and growth rate in commercial bank credit, merchant bank credit and gross domestic product as explanatory variables. From the results obtained, it was observed that there is no strict linear relationship between the explained variable and the explanatory variables. Though the model passed the goodness of fit test. From observations, it can be deduced that credits by merchant and commercial banks cannot be held accountable for increase in employment. Nonetheless, the Gross Domestic product, from the results impacts significantly on the increase in employment rate.

As a result, it is observed that merchant and commercial bank credits are not very good assessment tools of growth in employment. Therefore, to really measure the percentage change in employment rate, some other variables can be introduced into the model as a co-explanatory variable with the GDP.

5.2 Recommendations

1) A critical survey of SMEs in Nigeria should be carried out so as to identify the problems pertinent to them. An appropriate feasibility study should be conducted to identify the prospective areas for the SMEs

2) Introduction of business incubator schemes as obtained in other parts of the world.

3) Government should research and development (R & D) initiatives.

4) Government should ensure consistency in policy formulation.

5) The business owners should develop an orientation devoid of financial indiscipline.

6) An accessible financing window in form of a “venture capital fund” should be established.

7) The level of infrastructure should be upgraded in the economy

8) It may be expedient exploring creative ways of linking SMIEIS with the emergence of venture capital institutions designing new vehicles for investment in the SMEs equity market.

9) Government should ensure the existence of an enabling environment that will facilitate the sustenance of SMEs and other classes of business in Nigeria. Doing this entails ensuring internal and external macroeconomic stability.

10) To open opportunities for job creation, every local and state government should actively promote SME clusters in the areas where potentials exist at the grassroots level.

11) There is need to collaborate with Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) to put in place a well planned “incubator – industrial park” transition program to effectively address existing problems often experienced in the existing technology incubator schemes.

12) All for forms of regulatory barriers particularly with respect to direct and indirect taxes should be eliminated in order to encourage investment in the industrial sector as a whole and SMEs sector in particular.

13) Funding by banks and other institutions should be enhanced given that the credit allocated to SMEs is insignificant with respect to generating employment. Therefore, there is need for an overhaul of the financial sector to ensure that medium and long term funding are made available to SMEs to facilitate their development and sustenance.

14) Fund providers must ensure that the use of such funds is appropriately monitored to prevent mismanagement and misappropriation of such funds. To make this easier, the users of funds need be enlightened on the appropriate use of funds to ensure the growth of their businesses and national economy.

5.3 Conclusions

By way of conclusion, there is need to strengthen private investments, creative and innovative entrepreneurship and economic growth. This requires the elimination of conflicts, reducing corruption, enforcing laws on property and contracts and implementing sound and consistent macroeconomic policies and programs. All hands must be on deck to give the SMEs sector the attention it deserves at this point of national development. Any deliberate effort to eradicate poverty in the country must be addressed through the SME initiative because it has the enormous potential to enhance economic growth and development. Therefore, there is an urgent need for a comprehensive SMEs policy for the nation to promote rapid and sustainable growth of the sector and the economy.

Besides, it is essential that the new and present dispensation create more opportunities for private sector involvement by accelerating the privatization of government enterprises. Privatization opens opportunities to attract foreign investments and it also opens opportunities for SMEs to grow via linkages with the industrial sector. Government is hereby advised to focus diligently and decisively on the privatization exercise. Also, the private sector must synergize and adopt consistent, coherent and transparent programs for the development of SMEs. There is also a need for the private sector to harmonize efforts and adopt complementary strategies in tackling the numerous problems confronting the Small and Medium Scale Enterprises (SMEs) sector in Nigeria.



BIBLIOGRAPHY

Adejugbe “The Impact of Small Scale Industries on the

Nigerian Economy (NISER, Ibadan, 1987).



Adekanye, E. (1986) Elements of Banking in Nigeria F and. A

Publishers Ltd. (3rd Edition).



Aluko, S. A. A Survey of Small Scale Industries in Lagos,

Nigeria (1973)



Anyawu, C. M. Efficient Administration of Credit to Small

Scale Industrial Development in Nigeria. Bullion Vol. 25, No. 3, CBN pages 12 – 14.



Baumback, C. (1982) Basic Small Business Management

(New York: Prentice Hall).



CBN Bullion. Budget of Renewal (1995) vol. 19, No. 1,

January / March 1995.



Eriki, P. O. Basic Business Finance, Benin City.



Inyang and Ukpong (1992) Strategies for Promoting SMEs in

Nigeria.



Iyoha, M. A. (2000) Macroeconomics: Theory and Policy

Mindex Publishers, Benin City.



J. Sanai and Oshagbeni, T. A. (NISER Ibadan 1987) on “the

Motivating factors towards the development of SMEs.



M. L. Jhingan “Macroeconomic Theory 10th Revised and

Enlarged Edition 2000

Nigerian Bank for Commerce and Industry (NBCI, 1982)



Nigerian Council on Industry (NCI – 13, July 2001).



Nigerian Industrial Development Bank (NIDB, 1989).



Obitayo, K. M. Government Industrial Policies in Respect of

SMEs in Nigeria, CBN Billion, Volume 15,

No. 3 1991.



Ogbe, N. E., CBN Director of Research. An Address Delivered

On “Promotion of SMEs in Nigeria. 1985.



Olabiyi OP. Cit. 1994.



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Development Process. Business Times,

May 15, 1989.



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Nigeria. CBN, Economic and Financial Review Vol. 23, No. 3, September 1985.



Osaze (1986) Developing Small Scale Businesses in Nigeria

(Nigeria: Paumark Nig. Ltd.)



Oshagbeni, T. A.: Small Business Management in Nigeria

(Longman Publishers) 1988.



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Nigeria (NISER Ibadan (1987)



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Government in Japan, Some Lesson on Entrepreneurship Promotion.



Scarborough and Zimmerer OP Cit 1985.

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Concepts and Issues. Economic and Financial Review Volume 24, No. 4, CBN.



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Source: CBN Annual Report (Financial Statistics)

2000.

Summary on Video_Time Management

Time Management

The following questions are asked in addressing this subject

• Why do some people do better than others?

• Why do some people do things differently?

• Why are some people better time managers?

Time management is concerned with:

a. Life management

b. Personal management

21 – Time management ideas: Note – the key to time management is discipline

1. Goals – most important of all ideas. Self development goals are key to accomplishing tasks and goals must be written down for their achievement. The following questions are crucial in setting goals…

a. Who am I?

b. Where am I going

c. What is my purpose?

2. Organized plan of action: taking your goals and objectives and putting them together in form of a plan

3. Analysis: make a list of activities, engage in thinking and feeling of accomplishment

4. Set priorities: distinguish between relevant and irrelevant tasks. Focus on most valuable and important tasks and assess the impact of selected tasks on your future

5. Concentration: handle a task at a time

6. Set deadlines: ensure there is a lot of room adjustments and endeavor to beat deadlines

7. Use a time log: keep track of activities by writing to understand how your time is being spent. Recording also help in your analysis

8. Procrastination: there are positive and negative procrastination. Always endeavour to deal with procrastination by developing a strong sense of urgency

9. Delegate: clarify the following; what has to be done, who can do it, how it will be done, keeping track and do checks

10. Meetings: have a purpose for your meetings, set an agenda and always start the meeting on time

11. Interruption: Avoid using the phones often or staying too long on the telephone. Also, be careful with people-related distractions

12. Focus on key result areas: ask yourself the following questions for guidance; why am I on the payroll? What results are expected of me? What are my core functions?

13. Batching tasks: Engaging in similar and related activities at the same time or in a sequence

14. Neatness: leveraging on the TRAF system. That is; Task, Refer, Action and File

15. Getting chunks of time: some 60 minutes or more break can be very helpful. Distinguish between creative work and admin work

16. Transaction time; Learn more, earn more, keep important articles for reference and read all the time

17. Telephone: Get on it and get off it fast. Always keep good notes of telephone conversations

18. Punctuality: always endeavour to be there on time. Perhaps a Lombarty time of 15 minutes earlier is recommended

19. Work simplification: systemization of the work process can be very helpful. Follow the following approach to ensure you get more work done. Work longer, work faster, work on fewer but more important things, work on things you are better at, make fewer mistakes, do things as a team

20. Saying No: this may be useful when they concern activities that do not contribute to you most important goals

21. Balance: Despite work, try to enhance and improve the quality of your life. Pursue good health, great relationships etc.

Summary on Video_Negotiation

Summary on Negotiation Video


We negotiate in every activity in life

A gambit is any maneuver for advantage

Rules of negotiation

• Never jump at a gambit

• Never jump at the first offer

• Always negotiate to make the other party feel some competition

• Do not negotiate when it is too risky

Types of gambit

1. Flinching the gambit – in pretence.

a. Lower the expectation of the other party

b. Find out the hidden agenda

2. Reluctant buyer gambit – don’t show enthusiasm

3. Nibbling gambit – asking for more after winning or getting one thing. Always ask for more at the end of a negotiation

4. Counter gambit – makes the other party feel cheap

5. Vise gambit – makes you do better than the other party

a. Fear of titles – get away from this quickly when the negotiator presents this

b. Fear of punishment – this is also the fear of humiliation

c. Promise of reward

d. Influence of power

e. Control of charisma

f. Intimidation by withholding information

6. The “good guy”, “bad guy” gambit – two people ganging up with one of them pretending to be on your side

7. Set aside gambit – negotiate based on a small item/issue and then bringing up the bigger item/issue subsequently

8. Splitting the difference gambit – expressing disappointment after all efforts to make the other party come down

9. Trading off gambit – always asking for something in return for giving up one thing in a negotiation. Trading off stops the other party from asking for more

Principles of negotiation

• Value of acting dumb – people will try to help you in this instance

• Power of walking away – be really prepared to walk away if it really gets tough

• Put it down in writing – People tend to agree more easily to written statements

• Always set the following in the course of bargaining: a) determine a walk-away point, b) set a target point.

Summary on the Essentials of Negotiation

Essentials of Negotiation


CHAPTER 1: Nature of Negotiation

Definition and Overview (should not be in the map): Negotiation is an activity, usually in form of a dialogue with the aim of resolving differences in interests between or among existing parties.

Negotiation is what we do in works of life ranging from domestic, business, social and political relationships. Strong negotiations skills will enhance your chances of succeeding in your relationships

Its purpose is to enable individual parties reach an agreement that is acceptable to them.

N1 – Characteristics of negotiation

1) Involves two or more parties: a) individuals, b) Groups, c) Organizations, etc

2) Conflict of needs and desires – parties have disagreed on a common interest

3) Parties choose to negotiate or not – subject to the likelihood of getting a better deal

4) A “give and/or take scenario exists – either party is ready to make a sacrifice for a reward

5) Parties prefer to resolve differences

6) Existence of negotiating factors

a. Tangible factors – crucial and would be managed (price, terms of agreement)

b. Intangible factors – underlying psychological motivations that could influence outcome negotiations

i. Need to win the other party

ii. Need to look good, competent and tough

iii. Need to defend an important principle – eg moral, social beliefs

iv. Need to appear fair and honourable

N2 – When not to negotiate… Do not negotiate when,

1) You could lose everything

2) You are sold out – running out of capacity in business

3) Demands are unethical (avoid the wrath of the law)

4) You don’t have time (time constraints exist)

5) Your counterparty acts in bad faith (you can’t trust the other party)

6) Waiting would improve your position (delays might make you benefit from technological or policy changes)

7) You are not prepared (adequate preparation pays in negotiations)

N3 – Interdependence of goals (needing each other to achieve the desired outcome. Interdependence occurs in three conditions

1) Distributive (mutually exclusive with only one winner) now loosing prominence

2) Integrative situation (mutually inclusive as in a “Win-Win” negotiation) focus is now centered on this as a plausible goal of negotiations: eg a singer and an instrumentalist can make a great music band

3) Existence of BATNA (Best Alternative To a Negotiated Agreement) – refers to the state, manner and extent of interdependence between parties

N4 – Common Differences in Negotiators (they impact the negotiators attitude)

1) Interests – objectives or goals may be in disagreement

2) Judgment about the future (general understanding of opportunities around)

3) Risk tolerance – while one party may love risks, the other may not

4) Time preferences – desired time to seal the deal or receive consideration may differ

N5 – Conflict in Negotiations (conflict is a perceived divergence of interest) we look at conflict under the following heads

1) Levels of conflict

a. Intrapersonal or intrapsychic – lies within an individual in form of ideas, thoughts, emotions, values etc

b. Interpersonal – between individuals (workers, spouses, siblings)

c. Intragroup – within a group. Eg; team – like Group one, family, organizations, political parties

d. Intergroup – between groups, organizations etc



2) Demerits of Conflicts

a. Breeds unhealthy competition

b. Distorts perception

c. Breeds emotionality – could arouse anger of pity

d. Reduces quality of communication

e. Likelihood of rigid commitments

f. Increases level of differences



3) Conflict Management Strategies– these are coordinated measures and efforts directed at minimizing or resolving differences in a negotiation

a. Contending – having little concern for the other party

b. Yielding – caring less about own objectives or outcomes

c. Inaction – indifference about whose goals are paramount

d. Problem solving – aimed at maximizing overall outcomes in a negotiation

e. Compromising – Moderate efforts towards ensuring neither party loses



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Chapter 2_Strategy and Tactics of Distributive Bargaining

Distributive bargaining is used to describe a competitive situation. It is also known as a “win-lose” bargaining.

Here, the goals of one party is often fundamental and directly conflicts with the goals of the other party

Reasons why a negotiator should be familiar with distributive bargaining

a. They face interdependent situations

b. Distributive bargaining strategies are often used by people

c. Crucial for the “claiming value” stage of a negotiation

Fundamental choices in negotiations

a. Reach a deal with the other party

b. Reach no agreement at all

Important considerations in negotiations

• Determine a settlement point

• Have a bargaining mix

• Discover the other party’s resistance point

• Influence the other party’s resistance point

Tactical tasks in negotiation

1. Assess the other party’s target, resistance point, cost of terminating negotiations through;

a. Indirect assessments

b. Direct assessments

2. Manage the other party’s impressions through;

a. Screening activities

b. Direct action to alter impressions

3. Modify the other party’s perceptions

4. Manipulate the actual costs of delay or termination through;

a. Disruptive action

b. Alliance with outsiders

c. Schedule manipulation

Positions taken during negotiations

a. Opening offers

b. Opening stance

c. Initial concessions

d. Role of concessions

e. Pattern of concession making

f. Final offers

Closing the deal

a. Provide alternatives

b. Assume the close

c. Split the difference

d. Exploding offers

e. Sweeteners

Hardball tactics: designed to force the other party to do what he/she would not have done under normal conditions

Dealing with hardball tactics

a. Ignore them

b. Discuss them

c. Respond in kind

d. Co-Opt the other party

Typical hardball tactics

a. Good cop/bad cop

b. Lowball/highball

c. Bogey

d. The Nibble

e. Chicken

f. Intimidation

g. Aggressive behavior

h. Snow job

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Chapter 3_Strategy and Tactics of Integrative Negotiation

A situation whereby all parties to the negotiation can gain. This is a “win-win” case

Common elements in an integrative negotiation

a. Focus is on similarities rather than differences

b. Attempts to address needs and interest, not positions

c. Endeavour to meeting the needs of all involved parties

d. Sharing information and ideas

e. Create options for mutual gain

f. Use an objective criteria for assessing performance

Features of an integrative bargaining

a. Honesty and integrity

b. Abundance mentality

c. Maturity

d. Systems orientation

e. Superior listening skills

An integrative negotiation process

• Creating a free flow of information

• Attempting to understand the other party’s needs and objectives

•

Here, the goals of one party is often fundamental and directly conflicts with the goals of the other party

Reasons why a negotiator should be familiar with distributive bargaining

d. They face interdependent situations

e. Distributive bargaining strategies are often used by people

f. Crucial for the “claiming value” stage of a negotiation

Fundamental choices in negotiations

c. Reach a deal with the other party

d. Reach no agreement at all

Important considerations in negotiations

• Determine a settlement point

• Have a bargaining mix

• Discover the other party’s resistance point

• Influence the other party’s resistance point

Tactical tasks in negotiation

5. Assess the other party’s target, resistance point, cost of terminating negotiations through;

a. Indirect assessments

b. Direct assessments

6. Manage the other party’s impressions through;

a. Screening activities

b. Direct action to alter impressions

7. Modify the other party’s perceptions

8. Manipulate the actual costs of delay or termination through;

a. Disruptive action

b. Alliance with outsiders

c. Schedule manipulation

Positions taken during negotiations

g. Opening offers

h. Opening stance

i. Initial concessions

j. Role of concessions

k. Pattern of concession making

l. Final offers

Closing the deal

f. Provide alternatives

g. Assume the close

h. Split the difference

i. Exploding offers

j. Sweeteners

Hardball tactics: designed to force the other party to do what he/she would not have done under normal conditions

Dealing with hardball tactics

e. Ignore them

f. Discuss them

g. Respond in kind

h. Co-Opt the other party

Typical hardball tactics

i. Good cop/bad cop

j. Lowball/highball

k. Bogey

l. The Nibble

m. Chicken

n. Intimidation

o. Aggressive behavior

p. Snow job

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CHAPTER 4

NEGOTIATION STRATEGY AND PLANNING

The focus that drives a negotiation strategy

Direct effects of goal on choice strategy

• Wishes are not goals, especially in negotiation

• Goals are often linked to the other party’s goals

• There are boundaries or limits to what goals can be

• Effective goals must be concrete, specific and measurable

Indirect effects of goals on choice strategy

Strategy – The overall plan to achieve one’s goal

Strategy is defined as the pattern or that integrates an organisation’s major targets, policies and action sequences into a cohesive whole. When applied to negotiations, strategy refers to the overall plan to accomplish one’s goal in a negotiation and the actions sequences that will lead to the accomplishment of those goals.

• Strategy versus tactics

• Unilateral versus bilateral Approach to strategy

• The dual concerns model as a vehicle for describing negotiation strategies.



Understanding the flow of negotiations: Stages and phases

• Preparation

• Relationship building

• Information gathering

• Information using

• Bidding

• Closing the deal

• Implementing the agreement



Defining the issues

• Assembling issues and defining the bargaining mix

• Defining interest

• Defining limits and alternatives

• Defining one’s own objectives (target) and opening bids (where to start)

• Assessing constituents and the social context in which the negotiation will occur.



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CHAPTER 5

PERCEPTION, COGNITION AND EMOTION

Perception is a process by which individuals connect to their environment.



PERCEPTUAL PROCESS

Stimulus, Attention, Recognition, Transaction, Behaviour



PERCEPTUAL DISTORTION

Stereotyping

Halo effects

Selective perception

Projection



FRAME

A frame is a way of labelling these different individual interpretations of the situation.

TYPES OF FRAME

Substantive Outcome Aspiration Process identity Characterization Loss- gain



How frames work in negotiation

Negotiator can use more than one frame.

Mismatches in frames between parties are sources of conflicts.

Particular types of frames may lead to particular types of agreements

Specific frames may likely to used with certain types of issues

Parties are likely to assume w particular frame because of various factors



Another approach to frames – Interest, Right and Power



COGNITIVE BIASES IN NEGOTIATION

Irrational Escalation of commitment

Mythical Fixed – Pie beliefs

Anchoring and Adjustment

Issue framing and Risk

Availability of information

The winner’s cure

Overconfidence

The law of small numbers

Self – serving biases

Endowment effect Ignoring others cognitions

Reactive devaluation



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Chapter 8_Ethics in Negotiation

Ethics are applied social standards for what is right or wrong in a particular situation or a process for setting those standards.

Purpose of ethics

a. To define the nature of the world we live in

b. Prescribe the rules or norms for living together

Approaches to ethical reasoning

a. End-result ethics – the anticipated consequences determine the rightness of an action

b. Duty ethics – an obligation to apply universally acceptable standards determine the rightness of an action

c. Social contract ethics – the customs and norms of a community determines the rightness of an action or otherwise

d. Personalistic ethics – an individual’s conscience makes the judgment.

Ethically ambiguous negotiation tactics: these are legitimate ways individuals and corporations maximize their self interest in a negotiation

• Bluffing

• Exaggeration

• Concealment of information

• Manipulation of information

• Traditional competitive bargaining

• Intimidation

• silence

Motives of deceptive tactics

• Stronger negotiating power

• Orientation of the negotiator

• Cultural differences

• Negotiator’s perception of the other party’s level of competitiveness

Consequences of deceptive tactics: consequences may be positive or negative based on

a. Effectiveness of the tactic

b. Reactions of the other party

c. Self reactions

Explanations and justifications – expedient to rationalize, explain, or excuse the behavior towards verbalizing some good and legitimate reason why the tactic was necessary

Explanations/justifications shown by research include

a. Where the tactic was unavoidable

b. Where the tactic was harmless

c. Where the tactic will help avoid negative consequences

d. Where the tactic will produce good consequences

e. Where the tactic is fair or appropriate to the situation

How negotiators can deal with other party’s use of deception

• Ask probing questions

• Force the other party to lie or back off

• Call the tactic – tell him you know he is using a tactic (lying, bluffing etc)

• Respond in kind

• Ignore the tactic



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Chapter 9_Relationship in Negotiation

Negotiation occurs in a rich and complex social context that significantly affects how parties interact and how the process evolves. This is because people have past, present and future relationships.

Research has studied negotiation from two perspectives

a. Primary/Live negotiation. Eg: Labour negotiation

b. Secondary negotiation. Simulating case studies in labs by depicting them in games and plays. This approach has gained prominence over the years.

Problems of secondary research on negotiation

• It involves the mere use of sample data – it is not fully representative

• It serves descriptive purposes mainly

• It does not capture the real art of negotiation

Why nature and level of relationship could influence relationship (Sheppard & Tuchinsky’s case)

• Negotiation within relationships take place over time

• Negotiation is often a way to learn about the other party and increase interdependence

• Resolution of simple distributive issues has implications for the future

• Distributive issues within relationships can be emotionally motivated

• Negotiation within relationships may never end

• The other party’s behavior is often the focal problem in many negotiations

• Preserving relationships is the ultimate goal in some negotiations

Rules for negotiating in a relationship

• Obtain sufficient information about the other party before hand

• Recognize that negotiation continues in a long term business deal

• A third party may be brought in to monitor and enforce compliance with agreed terms

Dimensions in relationships – the nature, quality and sensitivity of feelings one negotiating party has for the other. They affect negotiating tactics and strategy

Four key dimensions of relationships

a. Attraction – this is the first level. Refers to the likeness for and interest in one another

b. Rapport – second level. Trust, integrity, and empathy is displayed here

c. Bonding – third level. Where parties form an alliance and look out for the mutual benefits of the relationship

d. Breadth – fourth level. When relationship has developed in scope and parties settle for the long haul

Balancing enquiry with advocacy: This is a tension that normally occurs in negotiation, where a party sacrifices its own preference just to maintain an existing relationship

Three key elements of managing negotiations with relationships

a. Reputation – the lasting impression the one party has about the other. It is a perpetual identity of what people think about us

b. Trust – a crucial element of any relationship. It is a person’s belief in and the willingness to act on the words, actions and decisions of others

c. Justice – this refers to equity and fairness in transactions and relationships

Idiosyncratic deals: flexibility versus fairness. This is the unique way an employer or supervisor may treat or deal with certain employees or subordinates compared to others in the same office or environment. They are increasingly being negotiated in the work place

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CHAPTER 11: INTERNATIONAL AND CROSS-CULTURAL NEGOTIATION
Introduction:

• The frequency of International Negotiation has increased rapidly over the last 20 years

• People travel more often and scope of business is more global

• International negotiation has become a norm for many people and organizations
Factors that distinguish International Negotiations

1. Environmental Factors

2. Immediate Factors
ENVIRONMENTAL FACTORS/CONTEXT
i. Political and Legal Pluralism: The existence different political/legal systems could bring about difference modus operandi

ii. International Economics: Economic factors, particularly differences in the value of currency will impact negotiation outcomes
iii. Foreign Governments and Bureaucracies: extent to which there is government interventions and/regulations vary among countries and will affect negotiation outcomes

iv. Instability: Volatilities in the state and quality of resources/production influence negotiation
v. Ideology: business sense a negotiator has plays a critical role
vi. Culture: Differences in norms and values across territories impact on negotiations
vii. External Stakeholders: The number of interested external parties (shareholders, labour unions, associations) has will influence their negotiation outcomes.
IMMEDIATE CONTEXT

This refers to the more peculiar factors that directly affects the outcomes of negotiations. They include;

i. Relative bargaining power: The unique skills of the negotiating part
ii. Levels of conflict: Level of interdependence and differences in identity
iii. Relationship between Negotiations: The kind of relationship parties have developed over time (if any) has a strong influence on negotiation outcomes
iv. Desired outcomes: The goals and objectives of each party influences his/her expectation and thus the outcome of the process
v. Immediate stakeholder: The skills, abilities, power, ambition and position of the representative plays a key role
CONCEPTUALIZING CULTURE AND NEGOTIATION

Culture cannot be disconnected from negotiation. They go hand in hand

The concept or meaning of culture

• Culture is a group level phenomenon: it is based on shared values, beliefs and behavioural expectations

• Culture is dialectic because these beliefs are learned and passed on to new members of the group
CULTURE AS SHARED VALUES:

We will consider this from two views as opined by Hofstede and Schwartz.
On the one hand, Hofstede opined that there are four dimensions that could be used to describe important differences among culture
i. Individualism/collectivism: extent to which the society is organized around individuals or groups
ii. Power distance: the extent to which less powerful members of organizations and institutions accept and expect that power is unequally distributed
iii. Career success/quality of life: Extent to which members held values that improved their career and quality of life
iv. Uncertainty avoidance: The extent to which a culture programs/makes members feel either comfortable or uncomfortable in unstructured situations


On the other hand, Schwartz highlighted ten fundamental values in identifying the motivational goal underlying cultural values. They are;
i. Power

ii. Security

iii. Tradition

iv. Conformity

v. Benevolence

vi. Universalism

vii. Self direction

viii. Simulation

ix. Hedonism

x. Achievement


CULTURE AS DIALETIC

This infers that culture brings about tensions in the learning process

Ways by which culture influence negotiation

i. Definition of negotiation

ii. Negotiation opportunity

iii. Selection of negotiators

iv. Protocol

v. Communication

vi. Time sensitivity

vii. Risk propensity

viii. Group versus individuals

ix. Nature of agreements

x. Emotionalism
Culturally responsive negotiation strategies

On the one hand, Rubin & Sander suggested that negotiators should focus on three factors namely;
1. Own bias

2. Strengths

3. Weaknesses
On the other hand, Weiss held that culturally responsive strategies may be organized in three groups or based on three conditions:
1. Low familiarity

2. Moderate familiarity

3. High familiarity

WHERE THERE IS LOW FAMILIARITY, negotiators may;

i. Employ agents of advisers (unilateral strategy)

ii. Bring in a moderator (joint strategy)

iii. Induce the other negotiator to use his/her negotiation approach
WHERE THERE IS MODERATE FAMILIARITY, negotiators may;

i. Adapt the other negotiator’s approach

ii. Coordinate adjustments


WHERE THERE IS HIGH FAMILIARITY, negotiators may;

i. Embrace the other negotiator’s approach

ii. Improvise or select an approach based on prevailing circumstances

iii. Create an approach that allows him/her to include aspects of his/her home culture


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Summary on Leadership Communication

CHAPTER 2


Document coherence can be achieved by using logical structure and effective organization and ensure document conform in content and format to expectations in the typical professional setting, through the following

1. Selecting the most Effective Communicating Medium

- Text Messages

- E-mail

- Memo

- Letter

- Discussion Outline

2. Creating Individual and Team Documents

A) Creating Individual Documents

-Analyzing and Planning

1) Clarify your purpose

2) Develop your strategy

3) Analyze your audience

4) Select your medium

5) Determine your key messages

- Creating and Developing

1) Decide on the best organization

2) Generate ideas

3) Gather data

4) Check for completeness

5) Double check your logic

6) Write a complete draft with headings

- Refining and Proofing

1) Reorganize if necessary

2) Revise, cutting excess

3) Read the document aloud to check tone and flow

4) Print out and proofread the final version.

B) Creating Team Documents

-The Single-Scribe Approach

- The Multi-Writer Approach

3. Organizing the Content Coherently

-Organization and Content

a) Chronological Structure (process description)

b) Logical Structure (In a proposal)

-Opening with Power

- Develop with Reason

-Closing with Grace

4. Conforming Content and Formatting Expectations in Correspondence

Examples

Letter- (block format preferred today)

Memo- (Include preliminary element of date, to, from and subject, avoid “re” unless used in

Your organization)

E-Mail – (Formatting similar to memo)

Text Messages



5 Include Expected Content in Report

- A Formal Full-Length Report (to have table of content)

- Including Exhibits in Report (exhibit like graph should not be inserted without discussion)

- Handling Research information in Reports(handle information obtained from Primary and Secondary research carefully)

- Proposal and Progress Report

a) A proposal ( include)

1) Introduction

2) Needs and Benefits

3 Scope

4 Method and Working relationship

5. Task time break down

6. Costs

7 .Qualification

8. Acceptance Clause

b) Progess Report (include)

1) Introduction

2) Project description

3) Work in completed

4) Work in progress

5) Work remaining

6) Overall appraisal of progress


7) Formatting Business Document Effectively

Document to conform to the following business writing standard

-Layout

-Spacing Alignment (single spaced with double space within paragraph)

-Font and Size (use traditional serif, font size of 11to 12 to be used)

- Using Headings

- Formatting lists (using bullets or numbers)



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CHAPTER 3

Using Languages to Achieve a Leadership Purpose

Correct use of Language expected in Leadership communication can be achieve using the following techniques

1) Achieving a Positive Ethos through Tone and Style

-Guidelines for creating positive Ethos

a) Do not try to imitate someone else

b) Read what you have written aloud to see how you sound

c) Be careful in use of complex language

d) Use strong verbs and avoid passive voice

e) Select positive over a negative construction when possible

f) Avoiding using too many modifier or empty words

g) Be careful in the use of qualifier

h) Eliminate fillers (such as “you know”)

i) Avoid use of jargons if use ensure audience understands.

2) Communicating Concisely

a) Avoid the use of the Passive Voice-The actor should come first in the sentence

b) Avoid Expletives Such as “There is or “It is”

c) Avoid the use of Prepositional Idioms

d) Avoids the over use of Relative Pronouns “Who”,” Which” and “That”

e) Avoid the Repetition of Words and Ideas

f) Do not Overuse Descriptive words particularly Adverbs (-ly Words)

g) Avoid Weasel words, Ambiguous Noncommittal Words such as almost, as much as

h)Be Aware of Jargon(Languagee used in Particular Disciplines) and Other Kinds of Gobbledygook

i) Avoid Normalization (Turns Verbs into Noun by adding-tion)

j) Finally, Avoid Redundancies


3) Using Business Language Correctly

-The Language Rule That Matter

a) The power of Punctuation (e.g)

-Colons

-Semicolons

- Dashes and Commas

- Apostrophes

- Parentheses

- Quotation marks

- Ellipses

b) Correct Use of Pronoun

- Personal Pronouns

-Indefinite Pronouns

-Collective Nouns


c) Effective Sentence Structure

- Parallelism

- Dangling Modifier


4) Employing Efficient and Effective Editing Techniques

Edit

-Document

- Sentence

-Mechanics


5) Making Computer Tools Work for You


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LEADERSHIP COMMUNICATION: CHAPTER 4

Chapter Objective

(1) Plan your presentation which includes developing a communication strategy

(2) Prepare a presentation to achieve the greatest impact

(3) Present effectively and with greatest confidence.

PLANNING YOUR PRESENTATION

In planning your presentation you need to consider the following

• Clearly define the aim and objective of your presentation

• Develop a communication strategy using communication framework

• Select the Topic of your presentation

• Consider the context of your presentation. Your context need to establish the background of your presentation and your audience should be able to understanding the purpose of your presentation.

• Decide a comfortable date for your presentation

• Decide the venue for the presentation. (i.e. within or outside the organisational environment).

• How long will the presentation last

• Start gathering materials and information needed for your presentation.

• Choose how to send out invitations (through email, text message, Telephone calls or letters)

• Choose and make reservation for venue of presentation

• Request for items that will motivate your audience (e.g. Tea break, Small chops, Lunch, Drinks and water). Your audience being aware of these will be motivated and will stay to the end of your presentation.

• Request for transport to convey your invitees to venue of presentation. (i.e. if the presentation is outside the organisational environment.

• Required tools: Ensure Laptops, Projector, Flip Chart/Board and Extension box are readily available

• Arrange for Name tags, writing materials (pen, jotters etc.)

• Arrange for souvenirs if necessary

• Prepare certificate of attendance if required.
MEDIUM AND DELIVERY METHOD

In developing a strategy for a presentation, you will be able to decide and choose from several options for the medium and delivery method of presentation taking into consideration the advantages and disadvantages of each medium and delivery method. Some of the medium and delivery methods are as follows:

• Stand up without Visuals

• Round-Table

• Stand-up with Computer and Projector

• Stand-up with Overheads

• Stand-up with Flip/White Boards

• Video Conferencing

• Phone Conference

ESTABLISHING A LOGICAL AND EFFECTIVE STRUCTURE AND FORMAT

• Analysis your audience and determine the most effective structure/format that best suits your audience.

• Decide whether to use direct approach (i.e. to present the and recommendation the present data to support it) or

• Indirect approach (i.e. present the facts and lead to conclusion

• Never ignore any opposition

• Ensure that each point is logically related to the ideas that provides it and information that follows.

• Ensure you carry your audience along as you progress by using adequate, obvious, translations from point to point.

• Use repetition more than you would in writing, especially in the body and conclusion

PREPARING A PRESENTATION TO ACHIEVE THE GREATEST IMPACT

• Develop the introduction, Body and Conclusion of the presentation

• Follow the Traditional Rules (Tell them what you are going to tell them, Tell them, Then tell them what you have told them

• Use some examples, illustrations, pictures and video clips to capture the attention of your audience.

• Test the flow by telling the story of your presentation aloud to yourself

• Practice with your slides to ensure you do not take too much of your allotted time.

• Test run all required tools for the presentation before the D-day

• Edit and proof read.

• Ensure your presentation is well organized.

• Check the room and setup and ensure you know how to use the equipments and that all are in good working condition.

PRESENTATING YOUR PRESENTATION EFFECTIVELY

• Introduce your presentation as soon as you stand up and start walking to the podium or front of the room.

• Get your nerves under control

• Eliminate stage freight

• Be conscious of time allotted for the presentation.

• Analysis your primary and secondary audience

• Consider the class of your audience

• Be bold and have full control of your audience

• Look directly into the eyes of the audience.

• Start your presentation with jokes, interesting short story etc.

• Create a positive relationship with your audience

• Watch the reaction of your audience as you progress.

• Read their facial expression at intervals as your presentation progresses.

• Be careful not to overwhelm the audience with too much detail.

• Use body illustrations as you would in conversation

• Be audible enough so that the last row in the audience will hear you.

• Pronounce your words clearly.

• Expect feedback and questions

• Expect relevant and irrelevant questions

• Expect negative and positive response

• Be ready to answer their questions effectively.

• Summarize what your have said by showing your audience summary slides that highlights your main points.

• Conclude, and close

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CHAPTER 6

Leaders need strong interpersonal skill and an understanding of and appreciation of cultural diversity to be able to operate effectively. The following skills will be discussed in this chapter.

Chapter Objective

(1) Appreciate the Value of Emotional Intelligence

(2) Increase your own Self-Awareness

(3) Improve your Non-Verbal Skills

(4) Improve your Listening Skills

(5) Mentor others and provide feedback

(6) Realise the Value of Cultural Literacy

(7) Use a Cultural Framework to understand Cultural differences

APPRECIATE THE VALUE OF EMOTIONAL INTELLIGENCE

An organisation’s culture reflects the emotional intelligence of its leaders and the leaders reveal that emotional intelligence through their communication ability and style.

A leader should be able to:

Understand Emotional intelligence by:

• Being aware of, understand and expressing himself.

• Understanding and relating to others

• Dealing with strong emotions and control his impulse

• Adapting to change and to solve problems of a personal and social nature.

Connecting Emotional Intelligence to Leadership Styles

This falls into six (6) categories: (by Goleman, Boyatzis, and Mckee)

(1) Visionary: Visionary moves people towards their dreams. Leaders need be visible in the organisation. They need to speak frequently in public internal forums, holding frequent meetings, and sending out statements that motivates and provide guidance to all the employees

(2) Coaching: Provide a strong, mentoring culture and place importance on training and development.

(3) Affiliative: Creates harmony by connect people to each other

(4) Democratic: Soothes fears by giving clear direction in an emergency’

(5) Pacesetting: Meets challenges and exciting foals

(6) Commanding: Commanding leadership seems not effective in motivating employees.

Other Qualities

• Personal Competence : This quality determines how we manage ourselves

• Self Awareness: Reading one’s own emotions and recognising their impact. Accurate self assessment by knowing one’s strengths and limits. Self-Confidence: knowing your self-worth and capabilities.

• Self Management: Ability to have self emotional control. Keeping disruptive emotions and impulses under control. Must be transparency, displaying honesty and integrity. Must possess initiative ability and must be optimism.

• Social Awareness: Ability to sense and understand other people’s emotions. Ability to demonstrate interest in other peoples emotion.

• Relationship Management: Ability to inspire, influence, develops, manage conflict, and change catalyst.

INCREASE YOUR OWN SELF-AWARENESS

Hendrie Weisinger calls self-awareness ‘The foundation on which all other emotional intelligence skills are built. He suggests that everyone exercise self-awareness at work by asking the following questions:

• What am I feeling right now?

• What do I want? How am I acting?

• What appraisal am I making?

• What does my sense tell me?

Using Popular Psychological Profiles to Understand yourself better.

This can help you gain insight into your behaviour and how you interact with others and how others interact with you. It will also help you to know yourself better and those characteristics that may hinder your ability to interact effectively.

Using The MBTI

MBTI consist of four dichotomies. The dichotomies are:

(1) Introvert Versus Extravert (indicates how you are energized),

(2) Sensing Vs Intuitive (suggests how you interpret or understand the world)

(3) Thinking Vs Feeling (shows how you make decisions)

(4) Judging Vs Perceiving (suggest your approach to life and work)

The Value of knowing the MBTI

• For then Team:

Awareness of personality types can be an advantage in team settings.
• Leaders and Thinking Vs Feeling

No type profile or set of personality characteristics makes one person better than another. Rather it makes them different in important ways.

• For individuals

Using a personality profile can help in developing your own self awareness and understanding how best to interact with and manage others.



• Legal Questions

Leaders must understand the legal ramification of psychological testing and the potential misuse of the information.

• Taking the MBTI

Before taking the MBTI you must understand the tests and their intentions. You may need to consider taking the results to someone licensed to the test.

DEVELOPING AN APPROACH TO IMPROVING EMOTIONAL INTELLIGENCE

Steps to achieving emotional Intelligence

• What do you want to be?

• Who are you now

• How do you get from her to there

• How do you make changes stick

• Who can help you.

IMPROVING YOUR NON-VERBAL SKILLS

Categories of Non-Verbal Communication

• Appearance: the way you look, dress and grooming

• Paralanguage: Vocal cues that accompany speech, such as volume, pitch and rate

• Kinesics: Body movements, such as gestures, postures and head movement

• Occulesics: Such as eye movement, such as eye contact or sit in relationship to others.

• Proxemics: Where you stand or sit in relationship to others.

• Olfactics: smells

• Chronomics: the way time is used.

The following may be helpful to improve nonverbal communication skills:

• Learn cultures in which you be interacting. Know about the culture of individuals before you can fully understand their non-verbal behaviour.

• Do not judge someone’s action out of context.

• Develop your understanding or sensitivity to nonverbal cues.

• Access your own use of nonverbal communication. Video tape and watch yourself.

• Listen to yourself giving to yourself giving presentation

• Should pay attention on how you dress, and use space around you.

IMPROVE YOUR LISTENING SKILLS

Listening skills is very important and the lack of them hinders many people’s careers.

Levels of Listening

• Empathetic Listening: this is where you refrain from judgement and listen with close attention.

• Hearing Words but not really listening: Receiver pretend to hear and even respond

• Listening in spurs: Receiver tune in and out, hearing only part of what is said. Pretending to listen when they are thinking about something else entirely.

Common Barriers to Effective Listening

• Speaker talking about a subject of no interest or boring

• Disagreeing with the speaker

• Being more interested in what you have to say than in other person

• Being distracted by other thoughts or activities around you

• Have preconception about the speaker or the subject.

• Responding emotionally to the words or ideas of the presenter

• Distracted by the speaker’s appearance or personality

• You only hear what you want to hear and fail to listen to anything else.

Ten Ways to improve Listening Habits

• Stop talking

• Stop thinking

• Avoid multitasking

• Try to empathize with the speaker

• Don’t interrupt

• Focus on the speaker closely

• Do not let delivery or appearance distract you

• Listen for ideas, not just facts

• Listen with open mind, not for what you want to hear.

• Pay attention to nonverbal cues and what is not said.

• Summarize what the speaker said immediately

• Record the main ideas when listening to speaker

• Practice paraphrasing others as they speak

• Listen to news story or something primarily factual and summarize.

MENTORING OTHERS AND PROVIDING FEEDBACK

Responsibilities of Mentor

• Provide guidance

• Be a Positive Counsellor

• Help protégé to identify and solve problems

• Lead protégé to solving problems

• Offer constructive criticisms

• Share experience

• Assign homework

• Refer protégé to others

• Be honest

• Solicit feedback from protégé

• Attend meetings

Responsibilities of the Protégé

• Shape overall agenda for the relationship, know what you want

• Establish realistic and attainable expectation

• Be open in communication with you mentor

• Establish priority issues for action or support

• Don’t expect your mentor to be an expert in everything

• Solicit feedback from your mentor

• Come prepared to each meeting to discuss issues.

Delivering Feedback

The following steps should work effectively when providing feedback in most business situations:

• Be well prepared for the feedback session

• Create a receptive environment

• Create a receptive environment

• Assume a comfortable demeanour

• Start by setting the context for the meeting

• Move quickly into your main objective

• Ensure throughout that the receiver understands your points

• Be specific about the actions you expect the receiver to undertake as a result of feedback session.

REALIZING THE VALUE OF CULTURAL LITERACY

• Realize the importance of Cultural Literacy. Realizing the importance of cultural differences is the key component for emotional intelligence. Understanding and appreciating cultural diversity can help you know how best to communicate with different audience.

WHAT IS CULTURE

Culture is the way of life of people, their behaviour patterns and attitude. It includes social characteristics, gender, age, profession, organizational function, company structure and style.
USING CULTURALL FRAMEWORK TO UNDERSTAND DIFFERENCE

• Understand cultural differences

• Agreement and Contracts

• Social Customs

• Understand Context: high context and low context

• Information Flow: How fast does messages travel, does it travel directly, How does information link, does the culture prefer words, graphics, what are the most effective means etc.

• Time: Are they involve in several activities at a time, Do they take time commitment serious, What are their usual working hours etc

• Language: All cultural levels have cultural differences.

• Power: What is attitude towards title and authority, Do individual openly challenge authority, How are decisions made etc).

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CHAPTER 9
ESTABLISHING LEADERSHIP THROUGH STRATEGIC INTERNAL COMMUNICATION

Effective internal communication provides organizational direction and employee motivation. If employees believe in their leaders, if they trust and respect them, they become change agent. The purpose of Chapter 9 was to recognize the role of communication by employees; assess internal communication effectiveness; establish effective internal communication; use mission and vision to strengthen internal communication as well as designing and implementing effective change communication.

Establishing leadership through strategic internal communication was discussed under six different scope as follows; recognizing the strategic role of employee communication; assessing employee communication effectiveness; establishing effective internal communication; using missions and visions to strengthen internal communication; ensuring effective mission and vision; and designing and implementing effective change communication


1. RECOGNIZING THE STRATEGIC ROLE OF EMPLOYEE COMMUNICATION

The strategic role of employee communication were identified in the chapter to include; educating employees on company vision and strategic goals as well as motivating employees to support the company strategy. It was identified that communication is capable of encouraging employees towards higher performance and limits misunderstanding and rumours that may damage productivity in a company.

2. ASSESSING EMPLOYEE COMMUNICATION EFFECTIVENESS

It was identified that factors exist which could limit employee communication effectiveness. To resolve the factors, there would be need to identify the communication problem; pinpoint areas for improvement; close all communication gaps; and establish an effective internal communication approach.


3. ESTABLISHING EFFECTIVE INTERNAL COMMUNICATION

To establish an effective internal communication in an organization, a simple analytical model was used which composed of five strategies namely supportive management, targeted message, effective media/forum, well positioned staff and on-going assessment.

a. Supportive Management. This implies that management should model the communication behavior they expect and should support it and encourage others to follow the model. Management should include communication as part of management review and appraisal and be willing to accept good and bad news without penalties.

b. Targeted Message. Management should communicate relevant messages, which must be clear and understandable.

c. Effective Media/Forum. Management should analyze the various media through which employees could be reached which include meetings, text, memo, mail, notice board and newsletters. Communication cost should be computed after which the best media to reach all employees will be chosen.

d. Well Positioned Staff. For effective internal communication, communication professionals should be hired by organizations. Communication professionals should be elevated and recognized. They should be present during deliberations and aware of decision making. They should be given high management positions in the organization for respectability and followership.

e. On-going Assessment. Management should include communication as part of employee evaluation.

4. USING MISSIONS AND VISIONS TO STRENGTHEN INTERNAL COMMUNICATION
The chapter explained the need to understand the importance of mission and vision in strengthening internal communication. The importance were enumerated to include inspiring individual action, determining behavior and fueling motivation; establishing firm foundation of goals and standards for corporate planners. Others include providing direction for everyone; and satisfying company need for efficiency and employee need for group identity.

Missions and Visions were defined in the Chapter and their characteristics were stated. Mission was defined as a statement of the reason why a company exist. It is usually intended for internal use. A mission is the basic business purpose and should establish a simple noble purpose and enduring reality. On the other hand, a vision was seen as establishing the company’s aspiration which is achievable within a reasonable time frame. While mission can be seen to be here and now, vision is entirely in the future.

5. ENSURING EFFECTIVE MISSION AND VISION

The characteristics of mission and vision was highlighted as well as the process of building an effective mission and vision. The characteristics of mission are that it must be clear and makes sense in the market place; it must be inspirational and suggest excellence; it must be stable but flexile for minor changes, and it must empower both employees and customers. A vision on the other hand must have goals and provide direction; it must be prepared for the future and must be applicable to the company. It must also be actionable.

The process of building an effective mission and vision were stated to be three which include CEO Developed. CEO developed is common in hierarchical structured organization; Leader – Senior Team developed which is applicable in team based organization, and Bottom-up Visioning which is prevalent in small organization.

The steps towards building an effective mission and vision most evolve from leaders. They are developed by leaders. Leaders are to ask for inputs from employees before having a final mission and vision statement. The overall procedure will involve creating initial draft; clarifying the meaning of the statements amongst employees; telling the world about what you are and what you want to become in a concise words. Others include developing strategies to make the vision very specific and actionable and continually testing the mission and vision through evaluation in the market place.

6. DESIGNING AND IMPLEMENTING EFFECTIVE CHANGE COMMUNICATION

It was recognize that organization change will be impossible without effective communication. It recognizes human and employees to be the barriers to change. It proposed effective communication with employees before, during after major change program as key to a successful change programme.

The chapter analyzed the procedure and scope for a change communication program. The procedures include determining the effectiveness of existing internal communication practice; taking stock of current communication practices in organizations and making improvement where necessary. The scope were identified by asking probing questions such as: Is the change a major change? Is it company wide or specific to a business unit? How many employees are involved? The response to the questions will unveil the extent of change required and the communication strategy to be adopted.

A three-phased communication plan was adopted in evaluating the structuring of a communication program for major change. They include determining change communication strategy and plan; launching the change communication and ensuring understanding by all; as well as monitoring results through feedbacks and making adjustments.


Group Opinion
We were of the opinion that several lessons were learnt in the Chapter 9 which will assist in internal communication as well as evolving a strategic mission and vision statements in our place of work.


We have also been equipped with the relevant skills to effect meaningful change programs in our organization.

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CHAPTER 10
LEADING THROUGH EFECTIVE EXTERNAL RELATIONS

The objectives of this chapter are;

1. To develop an external relation strategy

2. To build and maintain a positive corporate image

3. To work with the news media.

4. To handle crisis communication

This chapter provides guidelines to help manage external relations in day –to-day encounter and in crisis situations so that the company

Project a positive image.

DEVELOPING AN EXTERNAL RELATION STRATEGY

Effective external relations require a sound communication strategy. The step to developing a strategy includes:

1. Clarify your purpose and strategic objectives

2. Identify your major audiences or stakeholders

3. Create, refine, and test your major message.

4. Select, limit, and coach your spokespersons.

5. Establish the most effective media or forum

6. Determine the best timing.

7. Monitor result.


1.) Clarify your Purpose and Strategic Objectives

A company must have a strategy for all of its external relations activities: managing the press and media, establishing relationships with the financial analysts or investor groups, and creating and distributing all publications that touch stakeholders.

2.) Identify major audiences or stakeholders

A company’s external stakeholders consist of any persons, groups, or organization outside of the company that may be affected by the company’s activities or influence by its message and image. Among the stakeholders are: media, community, customers, investor, analyst, board, partners, distributors, suppliers\Vendors, and trade associations. The list should include anyone even remotely touched by the company’s products and services.


3.) Create, refine and test your major messages

Messages meant for external audiences are far more vulnerable to interference, interruptions, and barriers than messages to internal audiences. Many external audiences will be only weakly motivated to attend to your messages, and they will often be ignorant of much of the knowledge you can assume for your internal audiences. For example, while you may be able to assume that an internal audience will know the jargons of your industry, you cannot assume that outsiders will. You must ensure that all of your external messages conform to the following criteria: honesty, clarity, consistency, meaningful.

4.) Select, limit, and coach your spokesperson

Selecting the right spokesperson(s) to deliver external messages can be almost as critical as the messages themselves. Three major rules apply to selecting spokespersons: (a) they must be at the right level for the problem, (b) they must project a positive ethos, and (c) they should have received media training. The rank of the person delivering the message is as important as the message, if a low ranking office deliver the massage it could signal that the company does not view the issue being discussed as important enough.

5.) Establishing the most effective media or forum

Deciding on the most effective media or forum to ensure reaching the identified stakeholders is yet another critical component of external relations. A company will often use several different media to reach external audiences, depending on the important and magnitude of the communication event. Some of the medium includes: press conferences, press release, fact sheets, press or media kits, hotlines, websites, tombstone or advertising statements, and analyst briefings.

6.) Determining the best thing

Depending on the context, the timing of an external message can be critical, you must ask yourself what is going on around your communication event that will influence how your audience receives your message.

7.) Monitoring the result

Measuring the impact of your message on your constituencies is important, but it can also be difficult, expensive, and time-consuming.

Building and Maintaining a Positive Corporate Image

Reputation affects the bottom line, and even the strongest companies will have difficulty surviving damage to their reputations. Leaders of organizations must give high priority to establishing and maintaining a positive corporate image. Some of the medium that can be used in building corporate image includes: media relations, corporate public relations, government relations, and investors relations.

Working with the Media

The mistakes that tarnish a company’s reputation are most often uncovered and publicized by the news media. To increase chances for favourable treatment, it is important for a company to establish a positive relationship with the media and for every senior manager to know hoe to work effectively with them. The following should be considered before a company decides to talk to them:

 Understanding the media’s role and importance

 Deciding when to talk to the media

 Preparing for and delivering a media interview

Handling Crisis Communication

At one time or another, most companies will face a crisis. A situation requiring crisis communication involves a specific, unexpected and non-routine event or series of events that create high levels of uncertainty and threaten or are perceived to threaten an organization’s high priority goals. The following guidelines will help companies respond appropriately in most situations. They include: develop a general crisis communication plan, respond quickly to crisis once it occurs, the right people ready to respond and they will respond with the same message, put yourself in the shoes of your audience, do not overlook the value of the web, revisit your crisis communication plan frequently, build away to monitor the coverage, and perform a post crisis evaluation.

COMMENTS

Perception is becoming important these days because outsiders (external audience) will relate to an organization based on their perception. This chapter worth studying and it impart more knowledge to me.

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