The most medium size firms have expanded during this decade of economic growth and consumer class expansion. With the expansion is also an exponential increase in operational complexity. Often there was little change to the systems, processes and management methods and skills intended to support the growth. Increased cash flows often hid underlying organizational inefficiencies – while work duplication and costs quietly increased as more was done in the same way. Most firms maintain traditional practices that increasingly fail to meet and even disrupt current company needs. Layers and multiplication of staffs continue to process increased transaction quantities and data while effectively stressing staff and strangling organizational performance. Inter-departmental lack of coordination and breakdowns led more to blaming than new processes and solutions. Most often there are no meaningful metrics to clearly see or assess change requirements or even to serve as a baseline to begin to measure changes whether good or unfavorable. Planning, foresight of growth impact and execution of change decisions is at best sporadic and with the most basic knowledge of sound organizational change planning and management technique.
As the economy declines and the sophistication of competition increases, companies cannot function with continuing inefficiencies. As economic growth stalls, costs continue to push upwards. The trend of customer service and response continues declines within over-stressed systems and people. The internal culture and staff suffers. Organizational pain and stress resulting from lack of effective tools, distracted management and antiquated flows of information and processes scream – unheard – for real solutions. The apparent remedy of cost cutting fails to address the necessity of underlying structural change and exacerbates the true challenges and underlying stress.
Too often the heroic company president has failed to anticipate and to recognize the speed bumps intrinsic in the growth process including the need for different management styles, director and team leaders` skills, new procedures, processes and communications. There was likely a serious miscalculation as to when a new technology would need to be in place to measure where we are and to track the impact of decisions and change in growth. There may have been a failure to install a company-wide knowledge base to foster solution based discussions. The capital investment needed to set the stage for the next operational level may have not been anticipated as a priority or correctly allocated.
Today, many medium firms are now entering a period where external economic challenges are exacerbating internal dis-organization and stress. The Company President works harder putting out more and larger fires and symptoms without identifying and creating real solutions. Failure to have anticipated and to have planned for growth speed bumps that are natural to expansion led to added organizational complexity, stress and confusion. Perhaps the wrong people (skill and experience) are working hard but unable to achieve without the right information, technology, processes or strategy. Likely they are uncertain in knowing what resource is needed and how to justify the capital requirement. The impact on the company becomes increasingly apparent in poor results, and symptoms such as turnover and discontent may begin to appear.
With declining resources and capital, the options to remedy the environment is further challenged by the temptation to better focus on survival through cost slashing. This knee jerk reaction may further advance an already dangerous organizational cancer unless true causes and solutions are recognized.
Such internal difficulties are compounded by external challenges – particularly the impact of a depressed economy – increase in competition, challenges encountered by customers, and so on. The result is further organizational pain and trauma. The mask is removed as the requirement for efficiency and focus is more and more seen as absent.
Changes that should have been anticipated and implemented to facilitate a smoother ride through organizational change were not. Now, the need for these desperately exist. But the planning, implementation and execution to bring about a company stability is far more challenging. There is a need to restructure and to facilitate sometimes deep organizational change while trying at the same time to deal with daily confusion, stress and sometimes staff burnout.
The response of the company president and owner first needs to be one of clarity and firm but measured direction. He needs to articulate clear goals and objectives based on a sound strategy in a changing market. He needs to assess and respond to the internal needs of each team and process, identifying the stress points, prioritizing core needs, developing consensus for change and executing on a change strategy within an often difficult environment. The risk has increased, due to company success/growth and simultaneously the company failure to see and address the need for change proactively.
With the increased risk is the need for prudent action that is well designed and executed within a realistic assessment and knowledge base. Further management failure to correctly identify the most important actions, determine the right fix, and align all company stakeholders can be catastrophic at worst and organizationally traumatic at best.
The economic forecast is not bright. Increasingly there is the requirement for organizational restructuring, greatly increased efficiencies and better organizational alignment at all levels. The right prioritization is not accidental or inconsequential in management’s assessments and decisions. Focusing limited resources and time on the most critical – and changing – success factors is critical.