The socio-economic approach to management and organizational change

Socio-Economic Approach to Management (SEAM)

The Main Points of SEAM

Process of a SEAM Intervention

Finding Organizational dysfunctions and hidden costs

Human Potential

Intervention

Teaching

Coaching

Human Resources role in the SEAM Process

HR Intervention in SEAM Approach Leading to Financial Gains

Comparison of Typical OD Interventions vs. SEAM Interventions & HRs Role in Each

SEAM and Curiosity

SEAM and Work Life Balance

The human, the social and the economic aspects of business and in the process of management are essentially addressed to through a process of intervention and this is termed as the Socio-Economic Approach to Management or SEAM. This concept of management was first proposed in France in 1973 and is a very well researched organizational change for business.

Essentially this management process starts with the leaders in the organization who have the role of assessing and identifying what is not working or functioning well and then correcting the dysfunctions. The SEAM proposes the use of six management tools, the identification and the assessment of hidden costs and the political and the strategic aspects associated with a process of change to find out the diagnosis and implement it. Reduction of hidden costs and the development of the human potential inherent in all the employees of the organization are the two aspects that SEAM emphasis on (Conbere & Heorhiadi, 2011).

SEAM varies in the value and belief systems related to management that forms its base when compared to traditional management processes. Human resources and the people are essentially kept away from traditional management features that are often very fragmented and are often based on incomplete financial data. Both people and the economics and financial aspects of business are factored in, in SEAM. This new management approach insists that the main cause of the poor productivity of employee is a direct result of the manner in which they are managed. SEAM entails that profits can be increased ad new opportunities developed quickly by the identification and reduction of hidden costs and fast development of human potential.

The Main Points of SEAM

SEAM is a management tool that is essentially an intervention in the processes of business management and man management that are prevalent in an organization. Formulated, proposed and propagated by Henri Savall and his students' team, this intervention program leads to large system change by linking economics, accounting, and a special Socio-Technical Systems approach to large system change links (Markides, 2010).

The SEAM is not an intermittent tool for management that can be used in the short-term but is a long-term process that attempts to bring in qualitative changes in an organization, about how people and employee in the organization are managed and how that can lead to greater productivity leading to enhanced economic gains for the organization. Typically a SEAM intervention is a five-year commitment and the results of the intervention are only effectively visible after that period provided that the intervention is continued. All firms that enter into a SEAM commitment should have allocated at least three to five years to be able to find out some results from the intervention.

A firm's strategy is analyzed using a bridging qualitative interview to collect data along with observation method and an accounting analysis to find out hidden costs and economic analysis (Hutton & Liefooghe, 2011).

Validation for SEAM has been done through a very long process of experimentation and intervention in 1000 companies based in 30 countries and scattered over 4 continents for over a period of 26 years. This grants tremendous credibility to the theories propounded in SEAM and is the most researched management subject in the world. The multiplication and diversification of the cases of an experiment conducted in new companies and organizations situated in new countries add to the growing database every year.

SEAM works both in at micro and macro levels. It is both an external as well as internal connection and strategic planning process. It utilizes the enactment of the local working conditions and the changes in policy. It includes the changes in rules and the way relationship between the workers, the unions, management, the suppliers, and communities develops and pans out (Owen, 2004).

SEAM seeks to manage the economic performance of a firm both in the short terms and the long-term and creating sustainable competitiveness on one hand and balancing the smooth running of firms and it social attributes.

Given below is a pictorial representation of the elements of the Socio-Economic Approach to Management

(Source:web.nmsu.edu)

Process of a SEAM Intervention

Finding Organizational dysfunctions and hidden costs

Organizational dysfunctions are not uncommon in modern companies and firm as they have to coordinate various functions, processes, and people. But these dysfunctions make organizations less effective and the more dysfunctions, the more ineffective the organization becomes. Dysfunctions also soak up and result in wastage of valuable resources. The problem with most dysfunctions is that they are not easily measurable with traditional accounting as well as they are often hard to identify and see as managers tend to get used to them. But these dysfunctions have hidden costs that can be broken down into the cost per employee (Bunduchi, 2008).

Hidden costs due to organizational dysfunctions also have a time aspect. They can pertain to the present or even to the future. Hidden costs incurred due to wasted resources, lost opportunities, time wasted or income lost are issues that pertain to the present.

Not being able to prepare employees as well as the organization for functioning in the future and tendency to avoid potential future problems or even ignoring potential future risks are hidden costs that would have their effect in the future. While the amount of the hidden costs is relative to the size and nature of a company, it is a thumb rule that the larger and more advanced technologically an organization is, the greater are the hidden costs (Savall, 2003).

Human Potential

It is common to blame individuals or those who do not perform to expectations for the loss or the hidden costs while the actual culprit is the organization itself. SEAM entails that unhealthy systems in organizations are the problem for hidden costs or losses both at present and those that are to be incurred in the future.

Thus, the solution is not to fix the individuals as correcting individuals would not fix the organizational system. It is assumed that most employees want to do well and intend to contribute towards the success of the company. Ownership of their work is taken by employees when they are respected and included to participate in the process of improving the workplace. This leads to a thriving workplace. SEAM is based on the premise that the development of human potential is the source of the addition of value in an organization. This is in contrary to the neo-classical theory that value addition in firms happen due to the addition of capital and the Marxist economics theory that labor adds value to an organization (Gonzalez & Gonzalez, 2015).

Development of people in the organization is at the core of enriching an organization according to SEAM theory. People are more engaged and have a greater will to contribute when they develop. Thus, SEAM concludes the major dysfunction in dysfunctional organizations is poor management. SEAM theory states that poor management is not the singular problem with managers but a result of a dominant mental model that the western world has about management (Heorhiadi, A., Conbere, J. P., & Hazelbaker, C., 2014).

Intervention

SEAM is associated with bringing in a change to an entire system. It is a top-down process and starts with the top leaders in an organization and then cascades down through the organization until it reaches all the employees. This means that the ability to identify and correct a dysfunction is demonstrated by the leaders first before the employees are asked to do the same.

However in the entire process, there would not be any blame or retaliation. Typically in the first year, the intervention process would involve the leaders and a couple of departments or divisions. Departments and divisions are added in every subsequent year. The entire organization is thus included in the intervention within the time period ascribed to the SEAM intervention. In practice, the process of intervention is carried out by a team of expert intervener-researchers.

This is a systematic nature of the intervention. Hence a large team -- essentially all of whom are adequately trained in SEAM intervention along experts of using the tool, implement the process. The process of intervention involves the classical Lewin's action research where data is gathered from participants, analyzed and ten is fed back to the participants. This analyzed data is used to solve organizational problems. However what makes a SEAM intervention different from another management and HR management tools is that the process also calculates hidden costs and uses accounting to ascribe a financial figure to every dysfunction. This attaching of a financial figure to dysfunctions acts as a motivation for the company leaders to invest more time and money into the process. There is a brainstorming session with the employees after data collections where the employees address the major dysfunctions and attaches a cost to each dysfunction first which is followed by presentations of the views of the interveners. This helps employees participating in the intervention process to separate raw data and properly interpret the data (Stevens, 2013).

Teaching

Another aspect and aim of SEAM are to teach and educate the leaders and the managers about the principles as well as the process of SEAM. The intervention process also trains a few employees of the organization in the process who later on can implement the same by themselves. The change effort is sustained by both teaching and through the preparation of internal interveners play. The managers are freed to do their original work -- managing the functioning of the division under them as the managers are taught the use of six management tools through SEAM intervention which effectively increases the management quality.

Coaching

SEAM intervention is also conducted to coach leaders and managers during the process of intervention. The SEAM theory attaches significant importance to this aspect. Management theories have shown that there are a lot of confusions and anxiety during a change process and a lot of questions are asked by employees. SEAM intends to train and prepare the managers and the leaders and help them in preparing themselves to align the changes like restructuring or the development of new policies or the designing of a training course, etc. within their units to the overall strategic goals of the organization. It also adds a feeling of being valued, appreciated and supported by the managers as the coaching provides some form of emotional and psychological benefits also.

HR Intervention in SEAM Approach Leading to Financial Gains

As discussed in the previous sections, the role of HR in the SEAM intervention process is critical. A number of theories and practices that are practiced in HR management have similarities with the way people and individuals are given importance to in the SEAM intervention process. The philosophy of SEAM intervention is to find out the areas of dysfunction and attribute hidden costs to the dysfunctions. Elimination of these dysfunctions then leads to saving costs and thus to financial gains (Bunduchi, 2008).

SEAM is also about identifying dysfunctions of the future. These dysfunctions can be a lack of training of the employees to be prepared for a change in the business environment in the future or lack of efforts and strategies to prepare the employees for a future change. in terms causes for financial losses due to a dysfunction at the present time factors like wasted resources, lost opportunities, time wasted or income lost are responsible. These factors and causes are primarily related to proper training and skill development of the employees and the motivation fo the employees to act fast and work harder to deliver better outputs.

While SEAM intervention identifies these causes of dysfunction and resultant financial losses, improving or eliminating these factors can lead to solving the dysfunctional problem and can lead to financial gains. These causes are all related to an aspect of management of the human resources and they can effectively be solved by the application of appropriate her management theories and practices and through effective HR intervention. For example, the lack of training or skills of employees can result in wastage of vital resources of the organization. Demotivated employees could be the cause for an opportunity of income being lost resulting in financial losses. Factors and causes like these, while being identified by the SEAM intervention, can be easily solved through the intervention of the HR department and by following standard operative procedures and application of HR theories.

Comparison of Typical OD Interventions vs. SEAM Interventions & HRs Role in Each

SEAM has aimed to change the thinking and overall attitude of an organization towards incidents of dysfunction and relate them to financial losses. It also suggests ways and means for eliminating and reducing the dysfunctions and thereby making financial gains. SEAM aims to change the way an organization view dysfunctions and creates and understanding within the organization to accept that dysfunction exists. Thus in that sense, it is also an organizational development process that is achieved through intervention.

In comparison to typical organizational development processes and tools, the primary difference between a typical organization development process and SEAM is that the latter is aimed to work with the entire system of an organization. SEAM begins with leaders and one or two divisions or silos in the organization. As the months pass, more leaders and silos or divisions are added to the intervention and ultimately the process engulfs the entire organization. The process of SEAM intervention is not complete unless the entire organization has been a part of it.

On the other hand, typical and traditional organizational development efforts are not necessarily holistic and include the entire organizations. Organizations development can be brought in through an organizational change in small parts of an organization.

Typical organizational development processes often concentrate on the people at the top -- the managers and the middle managers. Many of the processes are structured such that it is hoped that the leaders and the managers would implement the development and change down the line. Typically such organizational development programs last for a week at the most. On the other hand, SEAM is a far intense exercise or intervention that always involves all the employees -- from the leaders to the last employee, over a long period of time -- typically three to five months at least (Savall, 2010).

Typical organizational development exercises focus on the process more than on the financials SEAM is so designed that it brings to the forefront the hidden costs associated with all dysfunctions. This helps employees, managers, and leaders to clearly see where waste is taking place and derive corrective measures. When financial figures are put in front of dysfunctions they become more prominent and are accorded greater importance by not only the leaders and manager but also the employees who are also included in the process.

Typical organizational development is primarily concerned with the development of the organization with scant regard for the development of individual development of the employees and even the managers. It is also accepted that leaders are most often the key to changing and shaping of the culture of an organization. SEAM intervention, on the other hand, grants its management tool to the managers that they can use to bring in effective change and manage the people under their jurisdiction. This also allows managers to concentrate on their original job -- running the department or division under their control this helps in enhanced productivity of the organization as a whole (Stevens, 2013).

The role of the HR department or management of the people in the organization is not a matter of concern in the case of traditional or typical organizational development processes. Barring the motivational factor and strategically getting the employees prepare for the change, individuals seldom become part of a typical organization development process and even then the HR department scarcely has any role and most of the motivation are done by the managers (www.researchgate.net).

SEAM intervention, on the other hand, involves every employee of an organization which includes the leaders as well as the last employee. It is directly linked to employees developing a sense of ownership and skills and training for efficient use of resources. In this aspect, the HR department of such organizations undergoing SEAM intervention has a detailed role to play. Another important aspect of the role of the HR in SEAM is the fact that this intervention process involves the granting of a sense of respect among all employees. This can be ensured by the intervention of the HR department and device ways to make the employees feel respected. SEAM intervention is based on the principle that the most important element are the employees, which is also at the core of HR and HR management in any organization. In this aspect HR roles and intervention assumes critical importance in SEAM (Conbere, 2014). But this is not the case in typical organizational development processes where the managers and the leaders are considered as agents of change and thus the only ones that are important. Therefore, the role of HR management in typical organization development is very limited.

SEAM and Curiosity

Curiosity is central to the process if SEAM intervention. In the process of intervention, managers and leaders, as well as the employees, are accorded the role of identifying the dysfunctions themselves. This is done at the second stage during the intervention process. The expert interveners of SEAM collect data on the first stage and then feed them to the employees and the leaders. At this stage, the process looks to encourage the curiosity of the employees. The employees are asked to identify the problems and dysfunctions and then assist them to solve organizational problems. This obviously excites the curiosity in employees are they become part of a management process. The employee curiosity is further evoked when the interveners allow the employees -- as participants to the process, to interpret and separate the raw data (Zandee, 2015). This is another stage in the process of intervention where curiosity of the participants is important. If a participant is not curious to know the data analysis or get curious about interpreting the data, then the process would become meaningless.

For leaders and managers, the SEAM process also attaches a financial figure to every problem or dysfunction. As managers and leaders would be more interested in the financial aspect and the financial loss or gain, the tagging of a financial number to every dysfunction raises interest and curiosity in their minds which drives them to further invest time and energy as well as money in the process of SEAM investment. The curiosity in the leaders and managers is evoked by the cost that SEAM attaches to every dysfunction.

SEAM and Work Life Balance

The process of SEAM intervention seeks to provide peace of mind to the workers and employees. The basis of SEAM intervention is to establish a focused environment in the organization and to take the fear out of the organization. One of the 14 rules of W. Edwards Deming - one of the creators total quality manage processes in the modern era of management and business, was to 'take the fear out of the workplace'. He believed that the will of complete willingness to be a part of the process of change and improvement of the workplace is inhibited when a worker is fearful of reprisal. Being fearful at work can affect the after work life as well apart from affecting productivity. It is the responsibility of the managers and the leaders to ensure that the workers are not in constant fear or under an atmosphere of fear most of the time. For many managers, the creating of an environment of fear is a way of management by keeping employees under constant fear.

SEAM seeks to eradicate this by including the employees in the process of intervention. SEAM theory is based on the premise of granting confidence and respect to the employees so that they become part of the process of change and accept ownership for the change. This is a change in the mindset of not only the employees but the managers as well. In this aspect, a sense of ownership and respect developed within the employees would leave them with peace of mind and satisfied and even motivated at the workplace this would add value to the work-life balance in the life of the workers (Hutton & Liefooghe, 2011).

Conclusion

Socio-Economic Approach to Management as propounded by Henri Savall and his students' team in 1972 in France, is defined as the process of intervention in organizations to identify dysfunctions in the organization and propose measures to eliminate them. The theory takes into account the human, the social and the economic aspects of business in conjunction with accounting and economical aspect of the business.

The lack of ability and not the absence of resources is the cause of most dysfunctions which has been established through research for a very long period, the most researched in the world, and SEAM interventions in over a 1000 companies in 31 countries all around the world. SEAM intervention seeks to invoke confidence and respect for the members of the organization and which is necessary to achieve comprehensive and continuous change. Since SEAM intervention accords a financial figure to every dysfunction, therefore removal of the dysfunctions leads to financial and economic gain for companies that use this method for organizational change.

The role of human resources is critical in the intervention process as used in SEAM. The process includes everyone in an organization starting with the leaders and managers in the organization and ends with the last of the employees. The employees become part of the intervention process and are asked to interpret data collected by the interveners. This process is different from the typical organization development process as it includes everyone in an organization in contrast to involving the managers and the leaders only.