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Business managers need to make tough decisions

By newbusiness
Created 21/01/2009 - 09:03
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The reality of today's business climate is that businesses in the UK are facing a very difficult time. Spending and confidence are down and sluggishness and caution reign. Meanwhile, entrepreneurs are facing difficult decisions that they may never have come up against before, following the UK's extended boom.

Should small business leaders hire or fire? Should they cut prices to maintain market share? How can they discourage devisive internal politics?

Making the right decisions will require leaders to balance what they wish to achieve externally, in the market, with the challenges that lie within their organisations.

The marketplace: narrow the focus

People often talk about retaining or marginally increasing market share when times are tough. Yet this can be misleading, particularly if it results in the chasing of all business at all costs - the good, the bad and the downright ugly. In reality, profitability and growth is achieved by companies that focus on the critical, the few priorities where most value is to be enjoyed.

To do this, business leaders need to set priorities based on customers needs. They probably need to cut costs too and may even need to do so aggressively. But whilst trimming costs is important, selecting what to cut is even more vital.

Some businesses cut voraciously, only to realise months later that they have cut the very capability they need to sell and deliver their business. Why, for example, would you cut sales associates immediately before launching a customer experience campaign to boost flagging sales? That is, unless you wanted a rival to swoop in, increase its own sales expertise, and increase profits by 52% - as was the unhappy outcome for this particular electronics retailer.

Businesses that make the right decisions develop a collective understanding of how their organisation creates value for their customers, and make their operational and budget-related decisions based on this understanding. In this context, it is much easier to determine if and what products and personnel should be cut.

Making the right decisions will require leaders to balance what they wish to achieve externally, in the market, with the challenges that lie within their organisations.

On the emotive issue of staff, small business leaders would be wise to consider all alternatives, such as salary freezing, and if these are more useful to the business long term and to internal morale.

The challenges within

Even the most successful companies with the most vibrant culture must deal with the stress workers feel in leaner times. When budgets are tighter, it is not uncommon that employees become defensive, territorial and competitive. Negative politics intensify at all levels, sapping valuable energy and focus on what matters commercially.

Employers should think about how they can bring about more co-ordination and alignment of different groups within the business. Framing an agenda around key business goals, and involving various staff members, is crucial. So too is the honesty to acknowledge the challenges the business is facing.

Don't be fooled into thinking that the stereotypical ‘strong leader' is best. Suppressing the heat of contention may get in the way of making the right decisions, and with the right level of ‘buy-in' from staff. Letting staff contribute, and allowing a certain level of emotiveness is both healthy and honest. Stepping in to manage that conflict and making clear how you intend to make decisions is more important.

Leaders need to make informed decisions that reflect what their customers want and value, and set internal priorities accordingly. Only then will you earn the respect from staff so that the business remains focused, the right decisions are reached, and the seeds are sown for the years of plenty - when that upturn comes.

For more information about the Forum Corporation visit www.forum.com


Source URL:
https://www.newbusiness.co.uk/articles/hrpayroll-advice/business-managers-need-make-tough-decisions