| STRATEGIC ANALYSIS |
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| About the present with eyes on the future II |
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What are the challenges organizations and top management face in this economic crisis? What are the key interest areas of global corporations? We take a look at them in the second part of our
article based on the research of our international business partner The Ken Blanchard Companies.
So what can be done?
If the reaction is only limited to budget decreases, then practically, we aren't talking about a leap but merely trying to preserve a state of affairs that will deteriorate in time. In my opinion the most important aspect right now, taking into consideration a reduction in training investments, would be increasing the efficiency of your performance management system. I think it's high time that every training program from now on be linked with the strategic objectives and the performance management system. The proof is in the research where the most frequent survival method is this one:
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Organizational challenges
From an organizational point of view the challenges are somewhat in sync with the choices made in previous years with a few exceptions though. As you can see the first major challenge is the current economic environment, topping everything else in terms of the energy being invested, even the competition. It seems that for some companies success simply means surviving this ordeal while for others it means proving they are the best. Organizational culture still remains extremely important whether we are talking about surviving or success, an area that, now more than ever, requires major resources and can create a major impact, positive or negative, on the company.
And if we look at the chart, we notice that the first half only has systemic challenges, that, when dealt with correctly, can ensure the success of a company in these difficult times.
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Major organizational challenges
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Top management challenges
When it comes to top management, the current crisis fundamentally changes the whole perspective. Last year, in the same study, the top priority was motivating employees, while the development of potential leaders as well as selecting and retaining key employees came a close second and third. These choices were being made at a time when the crisis was starting to appear in the US (the beginning of 2008) and Europe faced dim signs of regression.
The start of 2009 radically changed the way companies developed in previous years and brought forward new challenges:
- change management
- employee motivation
- reducing costs
- developing potential leaders
- client loyalty
Synthetically it's the simple definition of what a top manager must do in these times, when the signs of recovery barely appear and we, in Romania, are starting to experience the new economic situation. As it can be seen the chart is dominated with equally important priorities in areas such as efficiency (cost reduction, client loyalty) and HR (employee motivation, developing potential leaders). These choices show that this moment is not just an opportunity for reducing supplier bills or binding clients with sensational offers, which up till now have been hidden away or haven't even existed. It's about understanding that in the medium or long run you can't have great or excellent results (depends on what you choose) if you aren't willing to invest energy and even money in the people you are working with.
Why would employee motivation matter in times of crisis? The simplest answer is that, middle managers, first line managers and employees are starting to ask questions with regard to the company's well being, they are fearful and they are preoccupied with what's going on. The fact that certain positions are being eliminated and expenses are lessened reduce morale and if top management practices a strong leadership they will have to plan and invest energy in the contacts they have with the people they work with. Not necessarily in order to offer answers (sometimes they don't even exist, as the current crisis shows us) but at least in order to keep close and offer those around you some perspectives and possible work bearings.
I think that given the current situation, a healthy approach would be to treat your employees like adults and have open, serious conversations about the present and future. The tendency to treat employees like children and keep them away from the worries and scenarios being looked at by the company, due to a desire to protect, only increases stress and generates a lot more pressure when certain decisions are communicated.
Even if the labor market in Romania has been slightly realigned and job candidates have turned from stars that dictated conditions and numbers into people that cling to their workplace, appreciate the opportunity or even agree with an offer that is below last year's expectations, this doesn't mean a company should easily let go of existing employees. The cost of replacing them is the same maybe even bigger. The reason being that a good employee that now understands the importance of roughing it out a little and pushing himself harder, working a lot more for the same reward, can cost less and doesn't need such a big investment. On the other hand a new employee needs guidance, training (at what cost and in what period of time?), he needs supervision until he manages to gain the results that a more experienced employee managed to obtain with minimal intervention from his manager. My example was that of an employee with standard performance or a bit over that is being fired.
Practically speaking, if we are referring to cost reduction, we should look at not only bills and suppliers but internal management processes. In which of the key areas are managers able to practice a delegative style of leadership, that involves a minimum of energy with high results? If we think that every hour a manager invests costs (you can calculate this based on your salary to see how much you invest talking to your people about current tasks and guiding them), we should have a strategy for reducing management costs. In other words, in this critical period, how can we increase delegated task frequency so that managers can focus their energy towards strategic activities, much more important now when rapid reactions can lead to success. How can managers become even more delegative than before, transferring control of processes and quality of results to key employees that are thus motivated and become loyal? For more analysis and reflection here are the options and history of choices made at a top management level.
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Management Challenges
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Rares Manolescu
Senior Manager |
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Human Invest is a Premier League company in the arena of training and organizational development consultancy services, present on the Romanian market since 1998.
We are recognized for conceiving and implementing programs which offer managers an authentic experience towards improving their leadership performances, and thus we support companies in becoming more and more engaged in delivering excellent services for their clients.
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