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How to leverage HR to become a valuable business partner within an organization.

It is often difficult for HR and training managers to show how their interventions will improve the profitability of the business. Nick Denoon-Stevens and i-Fundi hosted a four-hour business simulation for Human Resource practitioners, consultants and managers with a view to demonstrate how HR Managers can help to build business success.

In this simulation, participants were given first-hand experience of running a business in a class environment. Far too often, employees don’t understand how their jobs add to the overall success of a business and with this type of action learning approach, each participant experiences how their contribution helps to make a business more profitable.

“If you want to teach people a new way of thinking, don’t bother trying to teach them. Instead, give them a tool, the use of which will lead to new ways of thinking.”  R. Buckminster Fuller

The purpose of the Team Business Simulation

The simulation was developed to:

  • Demonstrate how a simulation process such as Team Business can be used to break down silos within an organization and cascade strategy throughout a business.
  • Share the Action Learning methodology.
  • Display the wisdom of working within teams.
  • Show how to bring value to the organization through greater participation and understanding of what it takes to run a business.

“Give the pupils something to do, not something to learn; and the doing is of such a nature as to demand thinking; learning naturally results.”  John Dewey

The Team Business Simulation process

Participants are divided into groups and each group is given an opportunity to run a business making paper boxes.

Information is shared about the nature of the business, the costs involved to start and to run the business as well as other important legal, HR and finance considerations needed for the business to operate.

The groups are then:

  • Presented with a typical business challenge.
  • Required to meet to discuss the challenge and how to plan and make decisions.
  • Expected to run production shift for a predefined amount of time.
  • Made to take care of the administration, financing and reporting of their performance.
  • Asked to review and report on their team’s performance.

The key concepts learned in this simulation

  1. Individual effectiveness: Whilst each person within the team is an individual, they are still part of the team. How the team supports each other in identifying, assessing and developing improvement opportunities is seen as essential to its success.

  2. Profit drivers: Teams get to experience and understand the profit drivers in the business through the simulation. During the simulation, the various challenges reinforce this experience and understanding.

  3. Value creation and maximization: The teams are challenged to think about how they are creating value from what they are producing and what constraints they need to overcome to maximize this value.

  4. Systemic thinking: Participants are given the opportunity the analyze, discuss and evaluate the challenges and outcomes within the value chain.

  5. Good costs and bad costs: Teams make decisions based on information provided to them that will have an impact on the profitability of their business. They are therefore required to understand what good and bad costs are as well as how to calculate the breakeven point.

  6. Capacity utilization: The simulation requires that teams “manufacture” boxes. In so doing, teams quickly understand the consequences of how their labour, equipment and resources get used and where constraints and bottlenecks are encountered.

  7. Differential value: Teams are required to borrow to produce product. The point is to demonstrate the impact of borrowing on profits but also to show how this enables the business to grow.

  8. Bottlenecks: In the production of boxes, the team quickly experiences first-hand where the bottle necks are in the process and how to overcome the problem in-order-to increase output.

  9. Critical constraints: Challenges are set up so that teams may experience critical constraints in their output, sales and profit based on the decisions made by the group.

Outcomes from the simulation

The simulation provides the group an opportunity to experience first-hand this teaching methodology as well as a practical tool-kit that they can apply in their own organization.

The competitive nature of the simulation kept teams focused and committed to meeting the challenges presented at each stage in the process.

The methodology allows for the teams to assess their performance, learn from their mistakes and to take corrective action moving into the next phase.

What next?

i-Fundi and 3m Training have put together a Team Business Management Development Programme. This 5-day SETA-accredited programme incorporates the Team Business Simulation methodology with training in theoretical management principles.