One of the major concerns in running a successful business in today’s economy is being able to survive and sustain a healthy work environment, productivity, profitability & cash-flow management even through the low downs of business.
So what are the growing business concerns today?
• Lower Economic Growth
• Rising Costs
• Volatile Currencies / Fluctuating Exchange Rates
• Rising Global Oil Price
• Increasing Fiscal Deficit and Relatively High Inflation
• Tough and Fierce Competition in the Market
• Ever increasing customers’ expectations
• And at times lack of conducive Govt. policy, procedures and laws.
All these above listed concerns are leading to tough business situations for many organizations in terms of Decreasing Revenue, Growth, Profitability and Increasing Cash Crunch.
Many companies are struggling to keep up their business in this uncertain economic environment where there is stiff competition and the customer has a wider choice- it is a buyer’s market!
Besides these, some other business realities which companies have to cope with constantly these days are:
Impact of globalization on their business, Speed of Change, Skill Shortages, Increasing Diversity in Workforce, Technology Boom, etc.
How should companies tide over these tough times?
There are many companies which have initiated cost reduction programmes, adopted specially for the top 5-6 major cost drivers such as Material, Energy, Manpower, Finance Cost, Logistics etc.
Few companies have also aggressively initiated Lean Management and Kaizen activity for eliminating waste in various operational areas like Manufacturing, Supply Chain, Project Implementation etc.
Companies also have become more effective in terms of monitoring and reviewing of their Working Capital Management, Inventory Management and improvement of Operational Efficiency in processes in terms of Cost, Quality and Delivery.
Few companies have initiated Change Management Programmes for creating greater awareness amongst employees about realities of business and formed cross functional teams to address major concerns like cultural realignment to business realities and changed environment, optimizing cost, looking at new markets for their products, ensuring greater customer satisfaction to retain them, productivity improvement programs etc. A few companies also had taken the extreme step of down- sizing the organization through VRS or CRS programme.
In my opinion there are a few more measures that companies can explore and adopt which will differentiate them from others while managing business in difficult times.
In addition to the above mentioned programmes, I usually advise my clients to focus on these below listed aspects through Organizational Development and Change Management Programmes for achieving greater economy of scale in operation for today and preparing them for future challenges.
• Right Sizing and Resizing of the organization in terms of:
1. Structure: De-layering or Flattening the Structure wherever possible and necessary
2. Man-power Re-deployment programmes for optimum utilization of existing Man Power
3. Redundancy Exercise in terms of Skills, Jobs and Man Power
4. Optimizing Direct and Indirect Man Power Ratios & Cost
5. Improving Revenue and Profit per Employee by reducing total cost per employee
• Training and Re-training of Man Power for Cultural Realignment Programmes
• Multi-skilling programmes for Managers and Employees for handling more than one
• De-skilling program for eliminating Man Power Intervention in some areas of
operation and thereby Optimizing Man Power Costs and productivity
• Resource and Asset Rationalization program
• Review and defer Capital Investment Program
• Breakthrough Kaizen activity for maximizing results
• Relocate Product Portfolio especially on loss making products to phase it out from
• Decentralizing decision making process to the lower level of management for quick
response to customers.
• Creating an Action oriented organizational culture for effective execution of
programs for better and quick results etc
The companies do not need to adopt all the above listed solutions. Every company needs to customize these programmes, adopt those which cater to its individual needs and will give them optimum results at the company level. Finally, the company’s efforts must be towards building an environment of a Learning Organization, a Culture of Continuous Improvement in the processes in terms of cost, quality, delivery and innovation and above all creating a Competitive Culture to win in the market place.