Institutional Context of OR

This section contains a short discussion of OR's organisational position, and the procedures which apply to the conduct and evaluation of OR work.

The five in-house OR workers in this study all work at similar levels within their organisation. In each case, the OR manager is two bureaucratic levels below the board of directors, or equivalent. OR groups are positioned within a variety of management lines. The OR practices visited here are positioned within Logistics, Information Technology, Business Development, Corporate Planning and Research and Intelligence. In all these cases, ORers are not directly accountable to particular functions, but to other development/support services.

All of the practices studied in this research operate on a 'project' basis i.e. OR is administered (and/or sold) in discrete units called projects. However, it is clear that not all ORers' work is part of a formally designated project. Several ORers spoke of doing small pieces of work which are not documented. "Sometimes you just do the work", one of them commented. Another practitioner said that most of his work is of this type.

Projects are administered as such to make it generally easy to monitor and control OR work. Projects are also used so that clients (sponsors) make formal commitments to a piece of OR work. In practice, each project has (what are usually called)

"terms of reference" (ToR), which are usually drawn up through interactions with problem owners and sponsors. These may summarise the background to the project, and specify the reasons for carrying it out, the anticipated benefits and the amount of "effort" that is to be committed by ORers. The exact details vary considerably from organisation to organisation.

One ORer said "you draw up terms of reference .. and then you forget them". Whilst this was probably only a semi-serious statement, it indicates that ToRs are used to provide a focus for attention during the early stages of a project. They are also used to indicate that clients have 'signed' a "psychological contract" with the OR consultants (Schein, 1969).

Only one of the practices visited in this study was charging for individual projects, although another was about to adopt this way of operating. Where charges are made per project, formal evaluation of the OR group's work is relatively straightforward: The group does not have to argue for its existence, but simply has to 'pay its way' . In other situations, the economic virility (and advantage) of OR is usually monitored on an annual basis. At the very least, the group needs to demonstrate that it has "recovered its costs".

This may be done on a retrospective basis, whereby the OR manager reports to his superiors, recounting the benefits and costs of OR project work. It may be done, at least partly,

prospectively by the OR manager, who presents estimates of the group's forthcoming workload, and lobbies for support and adequate manpower. This may be done more than annually, so that project work can be anticipated. One group in this survey presently adopts this kind of approach on a project basis; they only undertake projects which seem likely to secure savings of at least £M million ("or equivalent strategic benefit").

One ORer commented "I suspect payoff is being looked at increasingly closely .. I don't think that's good .." Apart from financial virility, the most common means of evaluation is via continued project turnover and, in particular, via "satisfied" clients "coining back for more". ORers also consider informal feedback from clients as a sound means of evaluation. In one organisation visited, sponsors are asked to provide formal feedback to the OR group via a written questionnaire. The OR group can then use this information to supplement its arguments for financial viability.

The procedures described above help to measure client satisfaction and financial viability. Although ORers also evaluate their own work in terms of factors such as the "quality" of their work, and its impact, client satisfaction and financial viability appear to be the principal measures by which ORers are made accountable to their host organisation.

4.4 Summary

The social setting in which OR is practiced includes people who are concerned about the topic of a piece of OR work, people who have the initiative or the authority to commission OR work, and people who participate in the work. Much OR work

is part of a formal project, though work may continue beyond the project bounds.

Various client roles can be defined in reference to combinations of these characteristics. Notably, a problem owner is concerned, and has initiative, a sponsor has authority, plus sympathy with a problem owner's concerns, a

user participates, and a stakeholder has concern only. Individual persons may play more than one role, whilst roles may be played by more than one person.

Problem owners and sponsors are amongst a wider group of

decision participants. Each participant engages in intellectual processes of theory and proposal formulation.

Participants may then interact before negotiating choice commitments.

Boundaries are set, to the formulation of proposals and to the nature of interaction, in the form of the objectives and constraints of senior managers, usually within a bureaucratic structure. OR work is evaluated periodically with reference to these objectives; sponsors' evaluations of project work form part of this process.

Conflict may exist between decision participants themselves, or between decision participants and other stakeholders. Conflict is usually 'resolved' by appeal to authority, or by the exercise of power.

Chapter 5