Global economic crisis and internal gaps
N. K. Silva Vice Chairman Business Development
Centre
During turbulent periods, business performance declines and
operational uneasiness is sensed by enterprises. Business survival takes
precedence over business development during such periods despite the
argument of some business management experts that the business
development should take place more strongly during turbulence.
Weakening performance is caused not only by external tides; internal
mismatching too can contribute. But, in most practical cases, external
tides are offered as the only reason for business deterioration even if
a part of that is caused by internal viruses, knowingly or unknowingly
depicting a primitive human characteristic of blaming the external
factors for internally generated crisis.
Threatened environment
However, we are currently experiencing a threatened environment when
businesses are concerned probably aggravated by the impending global
economic downturn.
Large corporate bodies have started feeling the punch of strokes with
reducing sales or income, drying up of financial reserves, reducing
capability of facing the competition, demoralizing work teams,
increasing insecure feelings among top management which is gradually
trickling down and similar factors.
Although the situation is externally not visible to the naked eye,
many can sense that "something disastrous is happening" in terms of
business operation.
It is apparent that many business organizations have attributed these
"difficult to breathe" signs solely to the impact of the global economic
trend. As a result, they may approach the issue in different directions
which may not be the best stances for the prevailing situation of the
entity.
This is the reactive response of organizations to crisis and it
largely rests on emotional approach. What is more appropriate is the
proactive response to get over the difficult situation minimizing the
possible damage.
Internal gaps
It is true that the fact about the impact of global economic trend is
a high probability. But, most of these organizations would have their
"internal gaps" contributing to the organizational instability and this
contribution could be considerable in its magnitude.
Overlooking them and identifying the global and external issues as
the cause can hide the possible initial recovery steps.
In fact, such a crisis situation demands a precisely coordinated and
synergized strength in terms of internal resources to face the
challenge. What is more sensible, in such a situation is to analyze
about the "internal gaps" which require corrective approaches and take
necessary steps as early as possible. It will reduce the "organizational
stress" in an appropriate proportion.
Simultaneously, the top management can formulate and implement
suitable strategies in order to face the external tide. It is worthwhile
to draw attention to some of these "internal gaps" practically
observable in many organizations today.
Precise valuation of the impact is a "good practice" of the top
management. Expressions on the magnitude of the crisis should be based
on this good practice. Under - valuing and over-valuing can harm the
organization in many ways. Especially over-valuing of the impact can
penetrate "we-are-in-serious trouble" impression into the work teams
demoralizing them and incapacitating them prematurely. Precautionary
measures should be taken in communicating even the precise magnitude of
the crisis to the layers of human resources of the organization.
We have experience that some senior management members view the
situation through magnifying glass and discuss about the ICU status of
the company in the presence of the other employees instilling a heavy
dose of frustration and insecure mentality in their minds. This
information will traverse across the organization with the speed of
light, turning on the frustration generated "Collapsing Mode" in almost
all human minds of the entity.
Comments on the collapsing situation, even if it is not happening at
the rate emphasized, will take wings everywhere damaging the entity
image, sales, stock market values, and dampening the stakeholder
confidence. Therefore, applying a suitable mechanism to put the relevant
good practice across the senior management minds is vital although it
will not be precisely foolproof.
Marketing and sales gaps should be identified consciously and treated
with most suitable medicaments. Organizations cannot find a better
duration to unleash the full potential of sales efforts than such a
crisis period.
An organization can choose their approach either from maximizing the
intelligent sales effort to arrest the situation to a possible extent or
turning on the lethargic access to carry out sales operations with a
"not-worth-struggling" attitude. The latter takes precedence in the
minds of marketing and sales teams of many business organizations during
crisis periods.
Its destructive effects are not of linear form. They have multiple
consequences including the direct sales loss attributed to the pale
effort, damaging the customer confidence that affect future sales,
empowering the masculine competitors.
Name-sake applications
This issue should be sufficiently understood by all concerned in the
organization and appropriate steps should be taken timely. Sales teams
should utilize possible and suitable sales management techniques and
tools. This is the period for the sales teams to activate their skills
in full swing. In general, many "name-sake applications" of
sales/business promotional methods are visible.
The whole organization should focus its total approach to reap the
maximum benefit from such promotional initiatives. If the receptionist
is rude to the customers while the company spends millions of rupees on
television advertisements to grab more business, its promotional effort
is diluted jeopardizing the cashflow of the company. This is practically
happening in Sri Lanka.
In a large scale bank which spends money on TV commercials to attract
customers for savings, the existing customers are simply facilitated to
close their savings accounts when the customers want to withdraw their
money to invest in another bank.
Facilitation is good. It is a part of customer service. But, the
officers should be intelligent enough to discuss with the departing
customers at least to find out why they are moving towards the
competitors.
The bank should understand these reasons and take corrective action
to retard the rate of customer outflow. Further, some customers withdraw
their money without investigating into exact benefits of the new bank.
Cordial discussion
A cordial discussion would change the minds of such customers. I can
quote many practical experiences with our companies to justify the
magnitude of this issue of spending money on business promotion while
adhering to practices which dilute the promotional effort.
The organizational mentality of being happy with the visible weak
areas of the company's major competitors is another inner gap. It is a
"comfort zone" syndrome.
Although what is appearing is a weakness to our perception, the
competitor may be working smarter. It is safe to assume that they too
are equally capable of penetrating into the company's market share.
Satisfying with mind-centred logical reasons for apparent sales drops is
also a similar gap prevailing in many organizations.
Reasons cannot replace cash inflow and the survival of the company is
not ensured by the reason-filled reports. Productivity of individual
units along with the overall productivity should be maintained
optimally. Shift of focus is a common, but destructive habit of
organizations, especially during turbulent times.
Professional discipline
In actual fact, the companies need more professional discipline
during this period. Close monitoring is essential in respect of
productivity. The companies should be vigilant about the responses of
the customers on the service provided through enhanced customer service
facilities. Probably, the reason for installation of answering machines
in many companies is to provide an enhanced service to their customers.
But, a reasonable number of customers of such companies are unhappy
about the service. Always, human-human relationship is more satisfying
than human - machine relationship.
It is a wise decision to examine the quality of customer service in
an unbiased way. There are many practical gaps in customer service area
in many companies. The negativity of these gaps is amplified and
protruded during chaotic periods.
Competitive advantage specifics are the life blood of business
generating activity of commercial organizations. When they become weak,
competitors enter the territories of the market share of such commercial
organizations, posing a threat to survival. Therefore, during
turbulence, the importance of maintaining the competitive advantage of a
particular company should not be underestimated.
Shift of focus from the competitive advantage dilutes all business
efforts allowing the competitors to be customers' options. If the
technological superiority is the competitive advantage, maximum
concentration is necessary to preserve the status of technological
superiority. Frequent complaints on unattended technical issues are a
bad sign.
It triggers an alarm on deteriorating competitive advantage. Further,
there cannot be "missing links" in the competitive advantage
maintenance. Sales teams ignorance about such complaints on technical
issues speeds up the distillation of dissatisfaction of customers.
Ongoing customer delight schemes will provide poor harvests in this
context. Wastage of funds, non-reaching expected targets, visualization
of depleted "professional quality" of the company are some of the
consequences in this case.
Properly aligned mind-sets of sales personnel and their inspirational
levels can contribute positively to the recovery phase and the
development phase of the company. Generally, during a havoc period,
mind-sets start warping owing to the stories on the stability issue of
the company. This is common for almost all human resources, including
the sales personnel irrespective of the level of the company.
Their energy levels deplete. This situation then involves in the
vicious cycle, dragging the company to a further jeopardized situation.
Therefore, it is vital to "re-shape" the mind-sets of the sales team,
instilling the new energy on the confidence on their own products and
company, and adjusting their overestimated vision about competitors.
Internal competition
Strategic moves will be needed in order to eliminate the internal
gaps. "Internal competition" within the own organization, sometimes
within the same sales team is a self-damaging gap in many organizations;
in larger companies it is clearly visible.
Lack of sensitivity of the management job mentality of the employee
and the compartmentalization promoted by the management are some causes
in this regard. Internal competition raises its ugliest head during
crisis situation of this nature if it is not properly addressed. It is a
silent profit killer.
The beneficiary is the smart competitor. Instead, "synergy" and
"harnessing" concepts which are business-friendly should be promoted
within organizational teams upgrading team spirit. In handling the team
spirit issue, senior management should be very careful about team member
evaluations.
Personal attachments, friendships and the like should not have any
bearing on member evaluations. Biased judgements reduce or destroy
internal motivation of the disadvantaged member and endorse maintenance
of same low level of performance of the advantaged member. This is a
"double damage" tool.
In addressing the issues pertaining to inner gaps, 360 degree
approach is vital without limiting to a selected few traditional
initiatives. "Creative thinking" is an under-utilized tool in our
business environment. Creative thinking has the power to provide
solutions for many problems. It is concealed in the human resources of
the company. It is worthwhile to activate this "low cost - high
productivity" power.
Companies can professionally create the foundation using different
strategies to get the team members to contribute to the survival and the
growth of their company through creative thinking. When it happens, it
is powerful enough to provide solutions owing to the creative nature; it
is sustainable owing to the ownership of the team members. |