The Change Factor - The business catalyst
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Posts Tagged ‘economy’

Industrial Relations or Relationships?

I don’t tend to comment directly about change and change associated activity that is capturing the public eye. I’m not going to get specific today, but I have watched with interest the media coverage of a few recent industrial disputes in New Zealand. They have made me wonder what the management strategy has been, so here are a few do’s and dont’s of change and industrial relations.

  • Have a plan. As management you are the ones putting this forward. You have all the time to think things through, and by thinking things through I don’t just mean the change you want, but the way you will go about the process, the dialogue, the response to the workforce, risks, issues, dispute management etc. Your change should be strategic so make sure the planning is strategic too.
  • Make sure that your plan to manage the change is going to pass the test of law. If you have a significant change in working practice for example, you will know that it may not be well received or at best easily received. Think about what you are going to do if your proposals are rejected or if the workforce strike when preparing your plan. Your response is vital. If you are going to dismiss everyone, for example, then make sure it is legal.  If you have to turn round your actions after a few days because the court or your lawyers tell you to then it does not bode well for your reputation or long term relations.
  • Manage ethically and morally as well as legally. I’ve written about this before, but the best currencies within and outside an organisation are respect and trust. People join you, go the extra mile, endorse you, invest in your shares etc when you have those currencies. The leave, do the minimum, bad mouth you and sell their stake when you don’t.
  • Winning isn’t everything. You are not running a theatre of war, and destroying your business by ‘doing all it takes to win’ in an industrial dispute makes no sense (scorched earth policies worked for the Romans but won’t for you). Remember that the ‘enemy’ are people that you need onside when the dispute is over. Don’t do things just to annoy them it just lengthens the dispute, makes people dig in and creates noise around your discussions. In very few cases does it ‘weaken their bargaining position’
  • Leave Macho in the boxing ring. Calls of ‘sack them all’, ‘lock them out’ ‘dock their pay’ as soon as your offer is rejected is macho posturing not a policy (see bullets 1, 2, 3, 4). If you can’t convince them with your reasoning and your offer, then you won’t convince them with a war of attrition (they will come back because they are broke and hungry but with what attitude? and who will pay in the longer term).
  • Don’t manage your dispute via the media. The media will come knocking if you are interesting. In most cases, you are management so the media will be expecting you to behave like good bosses and act accordingly. But they will be looking for when you don’t as that is much better news for them. So behave with dignity, act accordingly and portray yourself and the business honestly and in best light. The media are not your friends to be given juicy tidbits about the opposition. They will take your tidbits but not respect you for them (you are the management and should behave better) and nobody that reads it will think well of you for the leak (see bullet 3). The info will not weaken anyone’s bargaining position anyway.
  • Just because the union bad mouths you in the media, don’t bad mouth them (see bullet 6). Even on your Facebook page!

In my experience the best managers of industrial relations always remembered that there was another day, knew that they had to look people in the eye tomorrow, and that they were the custodian of the organisational brand and reputation.

Three simple principles to bear in mind I think.


I was sitting with a friend recently who was waxing lyrical about the rugby world cup. He admitted that he was one of the many people who had said ‘it will be a waste of money’ when it was announced a few years ago, but now that it is here and he can see it in the flesh he thinks it is something ‘New Zealand can be proud of’.

The word ‘Vision’ springs to mind.

In 2010 during the football world cup in South Africa I saw a report about the new stadium in Cape Town. Its inception was widely contested by the locals who thought it would spoil the view of Table Mountain and be an unnecessary eyesore. Once it was built, and full of supporters, the opinions changed as it was seen as a spectacular statement for the city.

Vision again.

Its good to be consultative as a leader. To understand what the mood of your staff is, to engage them on the journey, to involve them in the solutions to the business challenges.

However most people, when asked their view on things, will tend to the cautious, the pessimistic or a preference for stability. These characteristics are useful in many jobs, that rely on these tendencies, but when it comes to taking an organisation to a completely different place, that is where leaders should come in to their own.


True leadership is needed to express a vision for an organisation that is bold and challenging and potentially game-breaking. Apple, Xerox, Amazon, Google are names that we treat as mainstream now but at one time they challenged the existing order of things.

To do so takes not only a clear vision but the strength to hold to that vision when challenged and to carry your people with you.

Redesigning your business is not the same as the early start-up phase of Apple , etc. You will be surrounded by people who are used to ‘the way we do thing’ and if your organisation has been successful doing it that way, then most will have real difficulty accepting a change in the way things are done.

It takes vision.

The world is changing again I am sure. Technology has driven change for so long, but now the world looks like it is going through a phase of financial uncertainty, where the ‘way we have done things’ will be redesigned. In the future your business wont be able to just sit out bad times. The future will reward those who have the vision to redesign their business rapidly and sustainably. Old fashioned cutting of headcount in the hope you can rehire and spend later wont work when the recession cycle is shorter. Stopping your investment will have a more crippling effect when others are better equipped and better trained whatever the cycle. Change will need to be different. Evolutionary, rapidly, routinely, with agility. The way you do things.

It will take vision.

Stubbornly Strategic

A few weeks ago I wrote about the need for leaders at all levels to have good advice and to keep those advisors close to them. It’s funny how the world can change in a few weeks. In that time, here in New Zealand we’ve had arguably our biggest disaster in the Christchurch earthquake, while elsewhere in the world Libya is in revolt and the associated impact on the price of oil is affecting economies everywhere. The ripple effect of such events means that many more things will change in months to come. In New Zealand businesses outside of Christchurch will feel some impact, if they are not already. And the cost of the rebuild will have an affect on everyone in the country. Already debate is raging about whether we should rebuild or not, and while I am not going to comment on that here, I would like to draw some parallels with the challenge that leaders face when the environment changes around them.
Businesses spend time in developing strategy to guide leaders in the day to day choices that are made and actions to be taken. For some strategy is a rock solid path, while others use it in a fluid way. A key part of strategising is looking at the context your business finds itself in and environment that could be expected in the future as well as the current reality.
But what happens when that context changes? A test of leadership is their ability to steer a course when the environment changes.
Nobody predicted an earthquake with such devastation as we’ve now seen in Christchurch. It’s a major city in New Zealand terms, ‘it’s always been here’ is the cry from some, so we must rebuild it. Others question whether that is a smart move given the changing environment, the relative cost and the uncertainty of the geological future. There are world cup games scheduled for Christchurch and the tug of war between the emotional cries of ‘solidarity’ and ‘it would be good for the devastated population’ are being countered with ‘can we risk it happening again?’.
In the midst of change leaders have to make choices. Do we stick with the strategy we’ve set? Do we watch a little longer and see what happens? Do we jump now and cut our losses? Whether it is a suddenly under-performing product or arm of the business, a change in competition, shift in consumer trends, hike in the interest rate, sudden collapse of the market, a rise in the exchange rate or the multitude of other challenges that arise, leaders are there to make choices.
The difficulty is that difficult times also bring a lot of day to day issues to manage and wherever you sit in the organisation it is easy to get sucked in to those. And all the time the circumstances are setting in and your opportunity to do what you should do, is drifting away. In times like this many leaders make reactive or emotional decisions: ‘stick to the strategy. It worked in the past it will work now’, ‘let’s jump, we can’t risk it’, ‘we’ve always done it this way and we’re still here aren’t we!’. And yes, you might get it right. You might dig in and ride the storm or you might jump and steal a march as others flounder.
But you know what you should do, even while you are reacting or digging in and letting circumstances run your day, dont you. You should gather trusted advisors and key thinkers around you and you calmly and dispassionately take the emotion out of the debate, test the strategy against the environment, surface the risks and opportunities and reset the course accordingly.
History will judge your choices that our politicians will make over the coming weeks or months. As a leader in business, your choices may not have as much significance nationally, but the questions will still be asked. 
So how do you want to be judged? Stubbornly or smartly strategic?

So you think you survived the recession?

As governments around the world begin to announce that the ‘corner’ is about to be turned and that the worst of the recession is over, you would think it a good time for organisations to breath a sigh of relief and relax a little. Lets face it, a number of your companies have gone and some businesses will have seen competition disappear.

But before you break out the champagne its maybe time to take stock and ask ‘how good a shape are we in?’ Here are four quick “health check’ questions that you may want to ask of your business or your team, however big or small.

Body Mass Index
A lot of businesses survive recession by cutting. Taking out staff numbers, reducing spending, stopping maintenance etc. If this goes too far this can leave you without the right people to take advantage of the opportunities that will now present themselves, with plant/equipment downtime just as you need it or systems that are more out of date than the competition. Sure, you had to do this to get through the bad times, but don’t ignore the choices you had to make. If you made them for good reason you knew the possible impact that they had. Now is the time to look hard at those choices and see what you will need to do in the coming months to get back in to shape so you can last in the long run. Of course if you didn’t take the opportunity to look at the shape of your business and get clear on what is core for your organisation you may be unhealthily slow to recover and need to shed a few kilo’s just as everyone else is getting in the starting blocks!

Those that survive hard times often do so because they have improved the agility of the organisation. Often rules are relaxed to allow opportunities to be taken. Bureaucracy and red tape are trimmed while people are encouraged to ‘go-get’. There are two sides to this as times improve. One view would be that you want agility at all times, and the other would be that too much agility means increased risk (shortcuts, compliance, not checking etc.). If you’ve learnt to be agile, you may have tested your old rules and systems to see what you really need to run your business and now you know what the new rules for the organisation should be. Before you put back the old constraints it is a good time to test what you might have learnt.

During good times it is easy to lose focus on what is core to the business by picking up whatever come the way of your business because they represent an opportunity to make a bi more profit. During leaner times you need to be really clear on the focus of your business or team to maximise what you are really good at, and where you can succeed in the marketplace. Did you use the recession as an opportunity to tune up your eyesight and get a focus on where you can succeed in the marketplace?

Blood Pressure
How have the people in your organisation come through the last year? I’ve heard from people who are covering two jobs and doubling their travelling! and others who have been doing very long hours. Is everyone coping? are they tense or overstressed? People who are tired, worn out or stressed tend to ‘just get by’ and lose their sharpness. At the very worst they start dropping off with health issues just as you need them to be fighting fit. If they’ve lost their vigour it may be time to re-motivate them or it may be time to take a look at the working hours habits that they have built up for you in the bad times. If you want to be healthy in a year’s time, nows a time to check the pulse and see if its strong!

We’d love to hear your ideas on a health check list for teams/organisations that are coming out of the marketplace!

Change in a difficult climate

In difficult economic times most organisations face some form of change. It is predictable that with potentially lower profits most companies will look to fixed cost reductions and that normally means staff cuts.

Staff cuts are often seen as the easiest change to make and for many managers staff cuts are the automatic reaction to any tightening in any market. These are threatening economic times and the move to staff cuts in more obvious, however in good times it is often baffling that value and growth creating opportunities are forsaken because of the pursuit of fixed cost reductions. Those of us that survived the slash and burn approach to change in the 1980″s know that many CEO”s made their name on short term margin improvements that had long term lasting damage to the company”s ability to grow; key knowledge was lost through early retirement policies, retention of “cheaper” staff also meant lower performance and the cutting of development of good leadership skills.

In bad times this short term versus long term argument is harder for most companies, particularly if survival is at stake. However it is easy to get sucked into panic measures and make the wrong moves for the right reasons. Not everyone is going to the wall, but most will be looking at job cuts to maintain margins in the coming months.

If you”ve lived through economic cycles before, you have that experience to draw on and you will have seen the right and the wrong way of making those decisions to cut numbers. If you were in junior positions then and now you are in a role that is responsible for delivery, it”s a good time to remember all the decisions that you saw which had devastating effect (the ones where you said “when I am a manager I wont do that”). Its very different when you are under pressure from your board or from the shareholders to make the right decisions for the longer term when perhaps their perspective is short term position or shareholder value.

The key thing to remember is that a cycle is exactly that. There is an end to it. Smart companies are using the current climate to take a look at where they may have got a bit fat in the past few years and where they are performing or not performing. Really smart companies are looking at the opportunities that the cycle brings them. Often those that make the smartest moves during the downturn come out of the cycle in the best position to take the larger market share from those that made short sighted decisions. For example, those companies who take a “we can fire them when we dont need them and hire them when we do” find that it takes longer to recover because they don”t have talent in place when the market begins to open up again. Being in the best position to take opportunities as they open up is vital to coming out of the cycle in a healthy position.

Often a downturn will provide opportunities to increase market share unexpectedly. That market share might not bring in the revenue that it did a few years ago but it will do on the upturn of the cycle. If a competitor fails in the downturn, are you in a position to take up their share and service their customers in a way that you hold them on the upturn? You wont be if you”ve cut your key staff to the absolute minimum. Yes of course you can pick up the failed competitors staff if needs be (and I have heard this argument on many occasions). But is this the time to set about converting a large group of people from the culture they knew to your “way of doing things” and do you really want to service a new customer with exactly the same people who looked after them but failed? Having key performers able to absorb new business effectively into your systems & processes is the only way to really take the market share and hold it.

The failure or possible weakening of a competitor is often an opportunity in itself, but be careful. There are many examples of take-overs whose intention was to grow the company out of problems. Some of these were vanity take-overs boosting the ego of the CEO or the board but some of these were just poorly informed decisions. A take over is a massive programme of change. To integrate the new business with yours is a massive challenge to your culture, your systems and your leadership. It takes considerable effort and resource (and dare I say specialist help) to achieve. Acquisition is a skilled path and needs to be entered in to strategically with your own house in order. If your stock system is inefficient and wasteful then the addition of a vast array of new stock is not really going to help, and who knows it may even destroy the profitability of the business that you bought.

These are good times to get your house in order but the key is to make the best moves to maintain the opportunities of tomorrow and being ready for change should the cycle throw a growth opportunity your way:

  • Trim your excess fat well. Look at your business performance with a cynical eye and see who has performed well and who let the market perform for them.
  • Don”t mandate percentage cuts across the whole business. It may seem easier to ask for a 15% staff cut from every manager but not everyone had 15% fat. This is a good time to really review your business.
  • Look hard at your pet projects. Every business has something that the board or the CEO just liked the idea of. If they are not performing or not for this market at this time, shelve them or drop them.
  • Get clear on your strategy and the KPIs for the downturn. Make sure your people understand them and know that they are for the short term. Clarity is sound leadership at the best of times but in hard times it is vital that everyone is rowing the ship in the same direction.
  • Raise your leadership game. Now is not the time to resort to command and control management style (or even worse, management by fear). Motivated people will find solutions to the problems you face if you ask them.
  • Keep your dialogue up, maximise your communication and draw on the talents you have with an inclusive approach. The more people understand the better they can do.
  • If you do have to cut numbers, do it well. A downturn is no excuse to text people to tell them they have lost their job! Remember that those who stay will judge your leadership by how you treat those that go. Manage redundancy badly and you will notch down the commitment of those that stay behind.
  • Educate your managers in leadership of change and an understanding of what people go though during change (ask us about our programme on Leading though transitions) and educate your people in dealing with the impact of change. After all, change is likely to be an important part of their lives in the coming years.
  • Be aware that people will always try to look busy. If someone has less to do because your market has shrunk its not necessarily their fault. Work with them on focusing their time well.
  • Work hard on morale. You cant afford big bonuses or celebratory parties today so get creative on what you can do. It”s a good time to write personal notes to people to recognise their efforts and walk around a little more and show some presence. A hands on touch can lift morale (as long as you dont spread doom & gloom)
  • Use enforced changes to your advantage by also improving the culture of the organisation in the process. Any well managed restructuring programme will have a solid communication approach, so use this to get across more than just the minimum of consultation
  • Don”t forget your values. Now is not the time to ignore what the company stands for . If you drop them now and operate in a completely different way don”t expect people to believe them tomorrow when things are good again. Values are there to guide your leaders in how they should behave in bad times as well as good.

Change in difficult times needn”t always be bad. In fact good leaders take the adversity of the situation and use it to their advantage to improve morale, embed their culture, improve leadership skills and raise the games of people with potential. Go in to your change with an opportunistic and positive mind-set and you you may find that you achieve exceptional results.

Ultimately the challenge of change in difficult times is a test of good leadership. Making good decisions for the short-term while maintaining the long term for the business is vital to your legacy for the business and to the reputation that you and the company carry forward.

If you are planning change, make sure you are well supported and if nothing else remember the words of Anton Chekhov..”If you cry “forward” you must make clear the direction in which you want to go”