Good companies with bad strategies

30 November 2009 1 Comment

Is yours one of them?  A singular focus on shareholder value is the Bermuda Triangle of strategy, according to Michael E Porter, director of Harvard’s Institute for Strategy and Competitiveness, as reported in Management Today, October 2009, pp 38-39:

Michael E Porter is generally recognised as the father of the modern strategy field. When Porter started studying strategy, he believed most strategic errors were caused by external factors, such as consumer trends or technological change. During a recent lecture, Porter stated that he now believes that many, if not most, strategic errors come from within.

["Companies do bad strategy to themselves.” This was one of the ‘takeaways’ from a lecture held at Wharton Business School by Porter titled “Why do good managers set bad strategies?“.

Porter also warned that managers get into trouble when they attempt to compete head-on with other companies. No one wins that kind of struggle, he believes.  Instead, managers need to create and develop a clear strategy around their company’s unique place in the market.

Bad strategy often stems from the way managers think about competition, Porter noted. Many companies set out to be the best in their industry, and the best in every aspect of business, from marketing to supply chain. The problem with that way of thinking is …   Read more of this post

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How to improve retention

29 November 2009 Leave a comment

Are you prepared for turnover rates to double? As the economic turnaround picks up steam, turnover rates in many organisations are likely to skyrocket and recruiting top-quality replacement workers will be extremely challenging, according to Dr John Sullivan writing in HR Leader magazine, 20 October 2009, p14 as below:

[Study after study has confirmed the notion that many employees would have left their employers months/years ago had the option to do so been viable. The economic downturn, combined with the mortgage crisis, has forced many frustrated, disappointed, and unmotivated employees to stay put. This trend is not a new one and is consistent with past downturns.

While turnover rates are at an all-time low, they most certainly cannot be taken as an indication of a firm's status as a desirable place to work.

Just as in years past, when job opportunities became more prevalent, employees will exercise their right to demonstrate just how much they appreciate the treatment they received throughout reductions in the workforce, furloughs, clumsy mergers, travel freezes, and budget cuts. The level of animosity among many will render most traditional retention approaches ineffective.

Some studies indicate that as many as two thirds of employees are ready to go. Unfortunately, few corporations are preparing today to handle the dramatic increase in voluntary terminations that will come tomorrow.

Retention is one of the most poorly managed goals in HR

HR leaders and recruiters talk a lot about the importance of retaining the very best employees that the organisation has invested so much time, money, and development resources in. Unfortunately, talk is where most organisations end when it comes to formalising retention efforts.

Among organisations that rank satisfaction with HR deliverables, retention often appears high in terms of importance but extremely low in execution, sometimes lower than compensation and benefits.

Its perennial position at the bottom of the list qualifies it as the most poorly managed staffing activity. However, its position at the bottom should come as no surprise, because few organisations can identify who's in charge, what the strategy is, and how retention efforts are measured and evaluated.

According to Dr Sullivan, three factors are the reason behind most organisations poor retention performance.]

Read the full article on retention to discover these three factors.

Sales Recruiters provide a detailed Replacement Costs Calculator which permits you to enter your own data to quantify the possible consequences of poor retention and inadequate hiring practices.  The numbers will surprise you.

Do you agree with Dr Sullivan?  What have been the most effective retention strategies employed by your business?  How expensive is it to replace a key person in your team?  Please leave a comment for the benefit of others.

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Taking advantage of risk

29 November 2009 Leave a comment

Are you unconsciously sabotaging your own success?  We can’t help it, according to Daniel Kahneman, a clinical psychologist who won the 2002 Nobel Memorial Prize in Economic Sciences, as reported in MyBusiness October 2003, p31.

But if you can learn to manage your intuitions, and your inherent ‘fear of loss’, you obtain a huge competitive advantage in any market place, as below:

[ Here's the deal: toss a coin. Heads, you win $1500; tails you lose $1000. Would you take the chance?

Speaking in Sydney in July 2003, Daniel Kahneman said that most people wouldn’t take the chance, even with repeated opportunities.

And in a related question … would you like to be more imaginative in your choice of investments, or more bold in your business development initiatives, but you can’t bear the thought of making losses?  If so, you’re not alone.  Read more of this post

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The long view of leadership

29 November 2009 1 Comment

Most people can’t think beyond next week. If you can think years ahead, you’re the boss – or probably should be – according to Elliot Jaques, a Canadian-born psychoanalyst and management expert, as below:

[That's the basis of a management theory that's working miracles for its corporate disciples.

If your employess don't know who their real boss is, if their pay scales bear little relation to the work they do, if the lower-downs think management is incompetent and the higher-ups are fighting turf wars with each other, help is on the way.

Despite what countless consultants have been telling you, setting up teams and quality circles is not an automatic cure for bureaucratic sclerosis. Such democratic solutions are like trying to steer a car by twisting the rear-view mirror back and forth-it may seem to work for a while, but sooner or later you will probably crash, because you're operating under false assumptions. The only lasting solution is to set up clearly demarcated levels of authority and accountability, and to make sure the people at each level of your organization are mentally equipped to do their jobs.

That's a drastic oversimplification of the prescription offered by Canadian-born psychoanalyst and management expert Elliott Jaques. His organizational theories, shaped by more than 40 years of on-the-job research, are beginning to revolutionize management thinking around the world. Some admirers believe that Jaques and his Stratified Systems Theory (SST) represent a major intellectual achievement - a comprehensive body of insights that explains organizational behavior the way Adam Smith described economic systems or Sigmund Freud explained the mysteries of the human psyche. Others have dismissed Jaques' work as a form of managerial fascism that arbitrarily slots people into organizational cages. But the handful of companies that have actually applied Jaques' theories have reported almost magical results, including quantum leaps in productivity and profits, and happier, more dedicated employees throughout the organization.]

Now that’s an enticing report!  Even if controversial.

If you’re prepared to return here and leave a comment for the benefit of others, I invite you to read the full article in the Canadian Business Magazine.

Filed under Business, Directorship, Entrepreneurship, Leadership, Management, Organisation, Productivity, Profit, Strategy Tagged with , , , , , , , ,

Finding and keeping the right people

28 November 2009 Leave a comment

It’s not that difficult, according to Ron Cacioppe writing in WA Business News (26 November 2009, p20) as below:

[During the past 12 months, the economic downturn resulted in a surplus of people on the labour market.

Companies worried about the loss of revenue and how to save costs, and many senior managers hoped they would be able to attract good people at a more reasonable pay rate when things turned around.

Things are turning around quickly in Western Australia in terms of the availability of people.

Chevron, Woodside and INPEX all have huge projects going ahead and are hiring people at a very fast rate. The mining, energy and construction companies are stepping on the accelerator once again to deliver projects, and need skilled people to help them get  the job done.

The State Training Board predicts an estimated 18,000 new jobs will be created per year in WA, while the Chamber of Commerce and Industry WA says it could be as many as 40,000.

Attracting and retaining the “right” people is once again on the strategic plans of companies as a high priority, and personnel recruiters are back in business.

While many companies think that paying people more than the company down the street will get them the people they want, the research doesn’t show that is the smartest way to attract and keep people.

A 25-year study involving more than 1 million workers by the Gallup organisation shows there are 12 factors that people want in their workplace. Read more of this post

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Coaching for profit

28 November 2009 Leave a comment

Leaders applaud coaching but fail to quantify results, according to an article in BRW magazine (November 26 to December 2, 2009, p44) as below:

[Leadership coaching has many admirers but it will remain a cottage industry unless it adopts more rigourous standards, consulting firm Rights Management says. Coaching is generally well-regarded but it's place in business is limited by the lack of a proven methodology for measuring its return on investment or effectiveness, the firm's regional general manager, Bridget Beattie says. "Moves are underway to establish the true profession of coaching, endorse a set of academic fundamentals and establish accreditation guidelines - but the industry is not there yet," she says.  A survey of human resources professionals found there was limited tracking of effectiveness either before or after coaching.  Among those who did track its effectiveness, the emphasis was on measuring leader satisfaction rather than business outcomes.  "Of course, the impact on individuals is important, but to really stack up, coaching needs to translate into business outcomes such as increasing market share, revenues and profits," Beattie says.]

I personally will not accept any coaching engagement without first defining and agreeing an answer to the question ‘what will success look like?’

Your thoughts on the matter?

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