Signposts of socio-economic events indicate that businesses may experience lean times in the New Year. Smart entrepreneurs and managers should read the handwriting on the wall and rethink the ways they manage their businesses in order to survive the times.
The global economic landscape is not experiencing the best of times across the nations. The West continues to grapple with uncertainties in their economic fortunes, arising from the ashes of the global recession of 2008, with the recent dramatic fall in the prices of crude in the global market. This is in addition to combating unrelenting terrorism inimical to humanity and prosperity on home fronts.
The United States of America is looking inwards domestically to shield its economy from a potential global recession. Scratching economic sanctions and fast-falling rubles cripple Russia. A further slump into recession and potential hardship for Russians could trigger unprecedented reactions of preservation and nationalistic defiance from Vladimir Putin with grave implications for Ukraine and inter-regional socio-political imbalance that could redefine global security and tranquility.
China may experience an economic slowdown, and a sluggish Chinese economy in 2015 will further compound a low oil price. China may export deflation to the rest of the world, as it continues to flood the market with cheap Chinese goods. The Euro-zone remains fragile. Brazil’s currency has lost more than ten percent of its monetary value. India and South Africa may experience a freezer on its economic growth.
On the home front, Nigerians were ushered into the New Year by looming austerity, inflation and devaluation of the Naira. The government is implementing a shoe-string budget as a result of the continued fall of crude oil price in the global market. The government may yet again turn to its development partners to borrow money to fund the budget and implement capital projects if the crude oil price falls below budget benchmark. The elections make the year more challenging for businesses. Boko Haram is still a threat to national security in the North East, and commerce in that direction is at its lowest ebb for businesses.
All these indicators suggest that lean times are here, and economic boom may be far-fetched unless there is a dramatic change in the global horizon. These developments hold far-reaching implications for both domestic and international trade, as well as businesses and the way they conduct their affairs. Consequently, organizations should realize to embrace this reality to enable them reorganize their businesses for survival through these times.
What should you be doing to manage in lean times? Your organization will have to change its approach to doing business in lean times. Your existing structure may not be able to support your business operations. Your workforce may be lagging and unproductive. Your financial strategy may not be smart enough to support you through difficult times. Your technological and social media platform may not be robust enough. Your communication plan may need to be redesigned. Your relationship and engagement with regulatory authorities and other stakeholders may need a new lease of life. If conscientiously re-engineered, a combination of these factors will enable you effectively manage your organization to survive lean times.
You should rethink your operating structure. Are you lean or flat? Are you bureaucratic? Are your procedures and processes creating clogs in operational efficiency? Are you top heavy? Are there layers of inefficiencies that people occupy without adding value? You should take a second look at your organizational structure.
This prevailing time affords you the opportunity to determine if your structure is supporting or frustrating your business. You will have to review and implement a realistic structure that creates a platform that enables your business to operate lean, flat, seamless and profitably whilst at the same time saving your money and eliminating wastes. Where functions are duplicated, roles have to be merged and excess workforce reassigned or relieved of such duplication.
Your structure should also be flexible to make room for multitasking and telecommuting. You should design a reward system that encourages people to want to do more instead of restricting themselves to their job description details. It does not necessarily have to be a cash incentive reward. Career enhancement is usually more important than cash for most upwardly mobile employees.
You should be on the lookout for employees who emphasize cash over career and ensure that your new structure does not have a place for them. This is because this category of employees does not add value in difficult times. Rather, they create problems through agitations for pay raise and improved conditions of service without justifiable and commensurate results
This is the time to get real with your employees. They have a right to know, and you should not hesitate to carry them along as you implement far reaching changes that will enable your business survive in lean times, and affect their career.
You want to ensure that employees who will work with you are those who are able and willing to support the organization to survive. The ability and willingness are sacrosanct to your business survival. You may need to hire performance-driven employees to replay laggards whom you will disengage. At such a time like this, sentiments do not generate revenue for your organization. You are supposed to be a compassionate leader but a shrewd businessperson who minds the survival of the enterprise and makes it a priority.
You should evolve a sound financial management practice that ensures honest, transparent and principle-based reporting of all financial dealings from management down to the rank-and-file employees in the organization. Your organization requires fiscal discipline to survival. All wastes should be plugged, and respective officers held accountable for the funds of the organization. Money is in short circulation, and unscrupulous employees will be looking for means to make extra illegal income off your organization.
Irrespective of your risk management system, your tracking and audit trail used should be foolproof. Your internal and external auditors should be proactive to guard against profligacy, fraud and financial mismanagement. You should also manage your cash-flow and treasury effectively well to guarantee the day-to-day transactions and medium to long term survival of the enterprise.
Lean times are not the best of times to engage in extravagant acquisition of office technology. Employees may have needs but the ICT manager should scrutinize their demands to ensure that essential technologies that facilitate work efficiency are procured.
Instead of investing in new technologies, employees may require a retraining on maximizing existing technologies. Obsolete technology should be traded in for new ones so that this does not constitute a setback for the organization.
The rule is to save money on unnecessary acquisition of new technology and become smart in the deployment of existing ones. There should be financial and performance justifications for each technology platform deployed in the organization. Most times, a sub-optimal technology deployment could be as a result of knowledge deficit on the part of the users.
Your organization needs to cultivate an enterprising presence on the social media platforms available in order for effective customer relationship management. However, such enterprise should be guided by a budget. Investment in social media platform should translate to business patronage for your organization and this should be tracked to ensure that you are maximizing the process of engagement.
Your employees should realize that you are not on social media for charitable image laundering. Your engagement on social media should echo your core values and project your organization as professional, and cost-effective. Customers still cherish and want to continue to do business with organizations that are not carried away by trends.
If your organization does not presently have a social media platform, you need to immediately deploy such resource to boost the sales and marketing of your products and services to a wider global audience. An organization without such platform in contemporary times risk being noncompetitive.
Your communication plan with employees, customers and the general public should reflect your belief in and respect for humanity. People do not appreciate it if you are vain and wasteful in difficult time. It simply suggests to them that you are insensitive and non-nonchalant to their challenges. You want to make the general public realize that you identify with them in these lean times: so, you have to reconfigure your communication platform, channel and plan to speak to their realities. You should not be extravagant. You should not be insensitive. You should be empathetic even when you have to take difficult decisions like disengaging excess workforce.
You have to be discretionary and professional when you have to shut down some production lines, or introduce innovations to your products or services to reflect changing times without hurting your bottom-line. You should train your managers and supervisors to eliminate aggression and frustration in their downward communications. Employees will suffer stressful conditions that are not work-related, hence supervisors and managers should show empathy when relating with them.
You should adopt a proactive and collaborative engagement style with your regulatory authorities. You should not wait for the tax officers to come knocking. You should get your books ready, work with and approach them for the statutory reviews. You should endeavour to negotiate where necessary for moratorium and scheduled payments of outstanding, if any. You should partner with your bankers, and/or other creditors on your cash-flow, loan repayments and management of your business. People you regulate and standardize operations in your industry will trust you if you proactively engagement them, and make full disclosure as permissible by extant laws.
Author: Babatunde Fajimi
Article was originally published in The Union Newspaper under Management Tips with Babatunde Fajimi in January 2015