Editorial: The Skills Needed to Handle Uncertainty: Skills, Systems and Processes

M Daud Ahmed
Editor, August 2013

Rapid technological innovation and its application in the globalisation of business activities are continuously and abruptly changing the business environment. Business information systems drive the businesses to deliver technology-driven real time services beyond geographical boundaries and locations. Small to medium sized organisations are under increased pressure in adopting the technological solutions and are becoming part of a global network. In addition, increased competition and the demands of consumers have increased the pressures on businesses to perform. Consequently, organisations have to function in both their country of origin, whilst being aware of the impact of changes in foreign jurisdictions in which they operate. Changes made in their native environment can rebind internationally, as has been seen in debacles such as Fonterra’s exports and the hold up of produce exported to China from New Zealand’s primary industry sector. Thus, skills and knowledge are required to future proof business against the dynamics of domestic and international policies.

Professionals such as accountants and managers need to acquire basic skills during the foundation training and continue to improve them on an ongoing basis. With the added complexities, not all the information can be constrained within a single person or work group, even in the many Small and Medium-sized Enterprises (SMEs) that make up the bulk of the New Zealand economy. With many organisations being spatiotemporally dispersed, or even virtual organisations being formed to manage ventures or as part of a supply chain, a way to handle the knowledge within and between organisations is required. Some organisations may be part of a large conglomerate and create truly Global Organisations (GO), whilst others are temporal in nature. Tensions may occur with such organisations or between partners due to conflicting objectives or because they are subject to different pressures from their environment. Systems are needed that can assess the overall performance while at the same time, adopting practices specific to the individual business unit’s situation. Such systems must be capable of adapting to changes and the uncertainties of the environment.

often, even with the participants being inducted with the appropriate skill sets and the organisations being inculcated with the necessary systems, it is down to the organisation to ensure that the business processes are employed in time, and accurate information is used as the basis for management and decision making. While the decision makers may be information rich, they may suffer a surfeit from the heterogeneous sources of both soft and hard information, some of which may be of dubious quality, they are often time deficient due to the conflicting demands both within and outside the organisation. Thus, the challenges faced by individuals and organisations are multifaceted and often conflicting. It is in this sea of uncertainty that we must ensure they are supported, rather than constrained and admonished, by the best of training, tools, and techniques to enable them to grow, rather than succumb in their professional working lives to the pressures of the rapidly changing technological and global society.

The New Zealand Journal of Applied Business Research (NZJABR) Volume 11, Number 2 features four articles on the organisational capability development and management practices. The first two address New Zealand issues related to the Knowledge Management in Small and Medium-sized Enterprises (SMEs), and the IT skills and knowledge required by accounting graduates. The third article analyses Performance Management Systems (PMS) in Global Organisations (GO) from the subsidiaries viewpoint and is based on a case study on a Chinese subsidiary of a multinational. The last article investigates the complexities and compliance cost of Fringe Benefit Tax (FBT) on motor vehicles.

The first article titled, “Knowledge Management (KM) in Small and Medium-sized Enterprises: A New Zealand focus” by I-Ching Lin, Rainer Seidel, Mehdi Shahbazpour and David Howell presents a case study of New Zealand (NZ) SMEs with the objective of proposing how KM can be better implemented in them. It examines the difficulties in implementing KM in such organisations and explores a solution that adapts their unique characteristics. This article proposes four guidelines, namely practicality, user-friendliness, KM strategy differentiation, and flexibility for future KM solution design for NZ SMEs.

The second article on “What IT knowledge and skills do accounting graduates need?” by Thomas Tam investigates the requirement of information systems and technological expertise for the professional accountants in New Zealand. The study scrutinises the guidelines provided by various accounting professional bodies for the provision of IT skills for accountants. These were refined in a two-step process. First, the Delphi technique was used to condense the various skills and knowledge areas in IT for accountants. Then a questionnaire was developed based on the items rated highest by these experts. A sample of 23 accountants was surveyed along with follow-up interviews to ascertain the most relevant topics. The research identified 18 topics in IT knowledge and skills relevant to accounting graduates. It then proposed the Induction-Diffusion-Assimilation (IDA) model for the delivery of IT content in an accounting curriculum.

The third article titled “Managing tensions to integrate a global organisation (GO): A subsidiary’s perspective” by Tracy Lu and Zahir Ahmed looked at the emergence of global organisations and issues in instituting performance management systems (PMS) in such organisations. Global organisations (GOs) are significantly different from regional organisations owing to their complexity and heterogeneity. A case study approach was used to assess how one manufacturing subsidiary in China adopted and adapted a PMS to achieve its targets. It considered the foremost characteristic of GOs is the maintenance of both coordination and differentiation. This introduces the potential for tension between the global organisation and the subsidiary. While the GO may focus on the financial targets of the organisation, the managers, and staff in the subsidiary focus on the means of achieving these targets. This includes measures of individual development that aim to improve the performance of the employees, developing their unique skills and enhancing their ability to achieve their personal objectives. The subsidiarie’s PMS needs to be adapted to consider the local conditions in which the subsidiary operates to achieve these aims.

The fourth and final article titled “Fringe Benefit Tax on Motor Vehicles: Complexity and Compliance Costs” by Heather Buchan, Karin Olesen and Helen Carberry contain examples from two case studies that exemplify the issues facing organisations in New Zealand in accounting for Fringe Benefit Tax on motor vehicles. This tax was designed when the marginal tax rate for employees was higher with the aim to encourage the employer to pay the employee directly in cash-based remuneration. Although FBT accounts for disproportionately small revenue, it is complex, and the compliance costs in accounting for it are high. The literature and case studies suggest that many small businesses are failing to account correctly for the appropriate level of tax to be paid for the use of the vehicles by the employees to personal use. Simplification and streamlining mechanisms adopted by the government have not had the desired effect, and further guidelines are required so that businesses can self-audit their own compliance.