Leaders must be realistic in order to be successful in hard times, says leadership guru John Maxwell
In difficult times, it’s easy to distinguish the leader from the follower. “Leaders will sign up to solve problems while followers will look for the exit,” says leadership guru John Maxwell.
“When you think about it, it’s the tough times that call for leaders. Great leaders prove themselves by stopping something from getting bad and turning it around,” he told the audience during a talk titled Leadership Resilience organised by the Institute of Training and Development early last month.
To lead in hard times, Maxwell said leaders have to face reality. “We have to look at our situation for what it is. Not what it was or what we wish it could be.”
Most people are familiar with the concept of an optimist seeing the glass half full and a pessimist seeing the glass half empty. A realist, according Maxwell, sees the cup and thinks, “once I drink it I need to wash the glass”.
Maxwell: Leaders that are successful have the ability to see and accept the truth.
He admitted to not facing reality himself, as a leader. When his leadership training and development company started to show slow growth after eight to 10 successful years, he found out it was due to his friends, with whom he had started the company with, who didn’t have the capacity to grow the company.
“Leaders that are successful have the ability to see and accept the truth. You cannot go to where you want to go until you know where you are. If you’re in a mall, you need to look at the directory and find the ‘you are here’ spot,” said the 62-year-old.
Whatever it is that leaders want to achieve, they have to make it happen. Maxwell said that during bad times “many people, instead of making it happen, looks around and asks what happened”.
To make it happen, leaders, or for that matter anyone, should put their dreams to the test, said Maxwell, who published his latest book, Put Your Dreams To The Test in March.
“However, more often that not, a gap exists between the dream and where the person is and it is called disappointment. The disappointment comes in when the expectations are much higher,” said Maxwell.
At a recent conference for business leaders, Maxwell found that a surprising 75% of them had given up on their dreams.
“The more valid reasons you have to achieve the dream, the higher the odds that you will. If you and I have one good reason to achieve the dream, most likely we won’t. Let’s suppose we have six or seven reasons, then it’s harder to give up on the dream,” he explained.
Maxwell shared with the audience four questions out of 10 questions from his book that they needed to ask to achieve their dreams. The first question — is your dream your own? The first dreams people have could be their parents’, siblings’ or relatives’. When people rent a car, they don’t care if its gets dirty or muddy because it’s not theirs, he said.
It is however, impossible to be motivated to pursue your dream if you can’t clearly see it. “It’s the clarity that gives you aspiration. At the beginning of your dream, it doesn’t have to be big, just clear,” he said.
“In the 1970s, I wanted to train leaders. I didn’t know how I would do it; all I knew is that I wanted to train leaders. The picture in the beginning is small but as you go towards it, the clearer, the bigger it becomes.”
Dreams depend on factors that are within or beyond our control. To be realistic, people need to find out what those factors are. “If you have a realistic foundation, you have a chance to achieve your dream. The saying ‘If you believe it, you can achieve it’ — that’s not true,” Maxwell said.
The fourth and last question is the tenacity question. Whether people achieve their dreams or not depends on their tenacity. Maxwell said if you practice the “rule of five” tenaciously and consistently, you could achieve your dreams.
The rule of five goes like this: you have a tree and an axe. On the first day, you take the axe and give it five swings and then put it down. The next day, you take the axe again, give it five swings and put it down.
“If you do the five swings everyday, no matter how many days it takes, the tree would go down. It’s only a matter of time until you win,” he said.
Each person’s rule of five varies. Maxwell said that he had been able to write many books because he writes a little every single day, even if it’s a holiday like Christmas.
He said, “The secret of your success is determined by your daily agenda. What I do everyday is going to determine my success. Whatever you do, I want you to discover your rule of five.”
Wednesday, November 17, 2010
Balancing the talent equation
With the global financial downturn projected to be prolonged, many companies — includng those in Malaysia — are taking this opportunity to transform by looking at cost-cutting measures, including slashing jobs.
However, what can companies do to retain their best talent while cost-tightening? What are the data and analytics needed to understand workforce capabilities, business-critical skills and top performers so that high-potential talent does not get lost in the shuffle?
The key to successful talent management in difficult times is the ability to think ahead and strategically about creating a workforce with capabilities to outperform the competition when the economy turns around.
The talent equation is simply this:
Talent = capability = performance = profits
Several fresh approaches to strike the right talent equation are available to help companies go beyond responses focused on staff reductions or salary cuts.
1 Adopt talent segmentation by linking individual performance with business value delivery
Many organisations routinely waste payroll budget by failing to set salary levels properly. The result: too much money paid to the wrong people and too little to those whose contributions are mission-critical.
With the Strategic Role Assessment (SRA) approach, roles can be clearly segmented and reward decisions can then be made on a transparent and equitable basis, with each job being paid according to its strategic value and market competitiveness. Base pay and total cash compensation levels can be set appropriately and checked against local-market benchmark data.
This is a comprehensive approach to reducing workforce costs that does not compromise workforce quality. The purpose of an SRA is to identify strategic talent — individuals who are top performers relative to their peers and who perform roles that directly support their organisation’s strategic goals.
An assessment of the entire workforce, function by function and business area by business area, can be conducted by plotting people according to two spectrums: performance measured against value. This analysis enables organisations to become far more nuanced and informed about how they invest in their workforce (see chart).
The result of an SRA is a powerful compensation strategy tailored to the organisation and thus difficult for competitors to replicate. And the payoff can be significant: from 6% to 10% of total payroll costs over a one or two-year period, with the added advantage of a less negative effect on workforce morale and engagement.
A downturn is actually a time to consider the kind of talent that is needed to drive an organisation forward. With current market conditions, organisations are in a better position to acquire valuable foreign talent at a lower price.
2 Optimise talent resources through more effective workforce planning
In a recent study with key HR representatives from the international banking industry, one of the six “hot HR topics” raised was discovering and managing talent resources as a critical factor for survival in times like these.
In short, the following points are critical success factors to help organisations stay afloat and ahead of the competition by operating at an optimal level (cost-efficient with the best resource pool).
a) Workforce capability and capacity review: Know where your talent pool is today and proactively manage these resources against the changing climate.
b) Mapping your talent pool to the right roles and providing opportunities to succeed: Optimise the talent pool by sharing talent resources, mixing and matching to meet business needs, especially when downsizing is inevitable.
c) Continue to identify, groom and engage internal talent: Past experience shows that companies that continue investing during crises attain better results during the upturn.
3 Re-skill workforce with speed and agility
A downturn is actually a time to consider the kind of talent that is needed to drive an organisation forward, how essential skills should be sourced, what an optimal culture would be, and so on. Most important is the flexibility and speed required to re-skill an organisation’s talent pool and adapt to the changing climate.
Learning is an essential talent management capability, but it is often the target of cost-cutting in tough times. Accenture research has found that high-performance businesses ensure their workforces are continuously equipped with the technical and managerial skills needed to respond to a changing global business environment.
Nearly nine out of 10 high performers, compared with fewer than six out of 10 low performers, have established an academy approach to learning, which more formally recognises the key skill areas and learning programmes they need to keep the capabilities of mission-critical workforces fresh and relevant.
An alternative method to re-skill the talent pool is to adopt infusions of valuable foreign talent into the local talent pool for the transfer of best practice and knowledge. With current market conditions, organisations are in a better position to acquire valuable foreign talent at a lower price.
4 Build crucible experiences to develop the next generation of leaders
In an economic crisis, the “think-tank” of an organisation often stems from leaders who see beyond issues and crises, and seize every situation as an opportunity.
However, what happens when a leader decides to retire, or worse still, the talent pool shrinks? Proper succession planning and management is crucial to ensure future talent is preserved.
Organisations should also take the opportunity to re-calibrate expectations and map traditional career paths to match new business needs so that employees can adapt to the new career progression and proactively manage their careers.
What matters most in leadership development is not innate capabilities but what one makes of an experience, particularly the traumatic and often unplanned crucible events that challenge one’s identity as a leader. The point is to turn the current economic situation into a learning experience for current leaders, as well as those who will form the next generation of leadership.
For example, this is significantly prevalent in the financial service sector, where central bankers recognise each economic crisis as a foundation for learning and improvements. The culture of knowledge-sharing and thought leadership enables rich insights and combines knowledge to form solutions.
Hence, while it is essential to ensure that today’s leaders learn from such economic challenges, it is even more critical that the exposure, experience and knowledge are passed on to those next in line.
In summary, while companies that can rally their best people to align with organisational goals have a better chance of thriving during and after the downturn, effective talent management is not simply a matter of exhortation or charisma. The workforce and HR analytics needed to achieve high performance are vital.
At the same time, this crisis could well be the period when a new talent equation finally comes of age.
Low Choy Huat is a senior manager while Goh Mei Lee is a manager with the management consulting practice at Accenture in Malaysia
However, what can companies do to retain their best talent while cost-tightening? What are the data and analytics needed to understand workforce capabilities, business-critical skills and top performers so that high-potential talent does not get lost in the shuffle?
The key to successful talent management in difficult times is the ability to think ahead and strategically about creating a workforce with capabilities to outperform the competition when the economy turns around.
The talent equation is simply this:
Talent = capability = performance = profits
Several fresh approaches to strike the right talent equation are available to help companies go beyond responses focused on staff reductions or salary cuts.
1 Adopt talent segmentation by linking individual performance with business value delivery
Many organisations routinely waste payroll budget by failing to set salary levels properly. The result: too much money paid to the wrong people and too little to those whose contributions are mission-critical.
With the Strategic Role Assessment (SRA) approach, roles can be clearly segmented and reward decisions can then be made on a transparent and equitable basis, with each job being paid according to its strategic value and market competitiveness. Base pay and total cash compensation levels can be set appropriately and checked against local-market benchmark data.
This is a comprehensive approach to reducing workforce costs that does not compromise workforce quality. The purpose of an SRA is to identify strategic talent — individuals who are top performers relative to their peers and who perform roles that directly support their organisation’s strategic goals.
An assessment of the entire workforce, function by function and business area by business area, can be conducted by plotting people according to two spectrums: performance measured against value. This analysis enables organisations to become far more nuanced and informed about how they invest in their workforce (see chart).
The result of an SRA is a powerful compensation strategy tailored to the organisation and thus difficult for competitors to replicate. And the payoff can be significant: from 6% to 10% of total payroll costs over a one or two-year period, with the added advantage of a less negative effect on workforce morale and engagement.
A downturn is actually a time to consider the kind of talent that is needed to drive an organisation forward. With current market conditions, organisations are in a better position to acquire valuable foreign talent at a lower price.
2 Optimise talent resources through more effective workforce planning
In a recent study with key HR representatives from the international banking industry, one of the six “hot HR topics” raised was discovering and managing talent resources as a critical factor for survival in times like these.
In short, the following points are critical success factors to help organisations stay afloat and ahead of the competition by operating at an optimal level (cost-efficient with the best resource pool).
a) Workforce capability and capacity review: Know where your talent pool is today and proactively manage these resources against the changing climate.
b) Mapping your talent pool to the right roles and providing opportunities to succeed: Optimise the talent pool by sharing talent resources, mixing and matching to meet business needs, especially when downsizing is inevitable.
c) Continue to identify, groom and engage internal talent: Past experience shows that companies that continue investing during crises attain better results during the upturn.
3 Re-skill workforce with speed and agility
A downturn is actually a time to consider the kind of talent that is needed to drive an organisation forward, how essential skills should be sourced, what an optimal culture would be, and so on. Most important is the flexibility and speed required to re-skill an organisation’s talent pool and adapt to the changing climate.
Learning is an essential talent management capability, but it is often the target of cost-cutting in tough times. Accenture research has found that high-performance businesses ensure their workforces are continuously equipped with the technical and managerial skills needed to respond to a changing global business environment.
Nearly nine out of 10 high performers, compared with fewer than six out of 10 low performers, have established an academy approach to learning, which more formally recognises the key skill areas and learning programmes they need to keep the capabilities of mission-critical workforces fresh and relevant.
An alternative method to re-skill the talent pool is to adopt infusions of valuable foreign talent into the local talent pool for the transfer of best practice and knowledge. With current market conditions, organisations are in a better position to acquire valuable foreign talent at a lower price.
4 Build crucible experiences to develop the next generation of leaders
In an economic crisis, the “think-tank” of an organisation often stems from leaders who see beyond issues and crises, and seize every situation as an opportunity.
However, what happens when a leader decides to retire, or worse still, the talent pool shrinks? Proper succession planning and management is crucial to ensure future talent is preserved.
Organisations should also take the opportunity to re-calibrate expectations and map traditional career paths to match new business needs so that employees can adapt to the new career progression and proactively manage their careers.
What matters most in leadership development is not innate capabilities but what one makes of an experience, particularly the traumatic and often unplanned crucible events that challenge one’s identity as a leader. The point is to turn the current economic situation into a learning experience for current leaders, as well as those who will form the next generation of leadership.
For example, this is significantly prevalent in the financial service sector, where central bankers recognise each economic crisis as a foundation for learning and improvements. The culture of knowledge-sharing and thought leadership enables rich insights and combines knowledge to form solutions.
Hence, while it is essential to ensure that today’s leaders learn from such economic challenges, it is even more critical that the exposure, experience and knowledge are passed on to those next in line.
In summary, while companies that can rally their best people to align with organisational goals have a better chance of thriving during and after the downturn, effective talent management is not simply a matter of exhortation or charisma. The workforce and HR analytics needed to achieve high performance are vital.
At the same time, this crisis could well be the period when a new talent equation finally comes of age.
Low Choy Huat is a senior manager while Goh Mei Lee is a manager with the management consulting practice at Accenture in Malaysia
The do's and dont's of makeup for work
By WENDY LEE
While the makeup you wear to work won't actually impact your performance on the job, it does help set the standard of how people perceive you.
A classically made-up face is going to make you seem more professional than one that looks as if you are going club-hopping. Even if you're a non-makeup wearer, you may want to consider wearing just a little, as a bare face in the workplace can also have its disadvantages.
Always remember: Office makeup is done in the morning and it should be such that it looks fresh all day. You should need just little touching up for the makeup during the day.
• Do: Show a clean complexion
o Say no to breakouts or age spots. Apply a thin layer of foundation to even out your skin tone and to achieve a youthful, natural look. Dark circles will make you look haggard and tired. So, do use concealer for your under-eye area.
• Don’t: Apply too heavy foundation
o Anything that is too thick will crack ... eventually. Opt for good quality foundation and remember: Blend, blend, blend.
• Do: Give your cheeks some colour
o While foundation and powder can give you an even and uniformed look, it can also make you look flat. Use warm, earthy gold tones to give it a natural look. Women with dark skin tone should use brown shades.
• Don’t: Over-blush
o Unless you are part of the Chinese opera crew. Overuse of blush drags people’s attention from eyes to cheeks. Use a large brush, smile and apply it to the fleshy parts of the cheeks in a soft circular motion.
• Do: Choose the appropriate eye shadow colours
o Colours like peach, rose, beige, brown, gold will look good on almost anyone. As a finishing touch go for black mascara on both the upper and lower eyelids. Chic and decent eye makeup will highlight your natural beauty and looks simple but flattering for business meetings as well.
• Don't: Use shimmers and products that glitter
o A hint of shimmer is okay on the cheek bones to make you look healthy and vibrant, but glitter is not. If you can see chunks of shiny particles in the product, put it down and opt for something much more subtle
• Do: Look around you
o Makeup suitable for work depends greatly on where you work and what you do. A bright-red lip may not work in a corporate office but would look great on someone working in fashion. The key is to find a look that works for you and suits the environment you are in.
• Don’t: Go barefaced
o You need to look as fresh at 5pm as you did at 9am so do use some foundation and add colour to your face.
• Do: Look for long-lasting products.
o A waterproof mascara and long-wearing foundation will help you to look as fresh at 5pm as you did at 9am. Remember to touch up your lipstick or gloss, and use blotting powder to nix a shiny nose, throughout the day.
• Don't: Spend hours getting ready.
o You are not a doll. Office makeup should always make you look like an enhanced version of yourself, not a photoshopped version! Don’t spend more than 20 minutes in front of the mirror.
While the makeup you wear to work won't actually impact your performance on the job, it does help set the standard of how people perceive you.
A classically made-up face is going to make you seem more professional than one that looks as if you are going club-hopping. Even if you're a non-makeup wearer, you may want to consider wearing just a little, as a bare face in the workplace can also have its disadvantages.
Always remember: Office makeup is done in the morning and it should be such that it looks fresh all day. You should need just little touching up for the makeup during the day.
• Do: Show a clean complexion
o Say no to breakouts or age spots. Apply a thin layer of foundation to even out your skin tone and to achieve a youthful, natural look. Dark circles will make you look haggard and tired. So, do use concealer for your under-eye area.
• Don’t: Apply too heavy foundation
o Anything that is too thick will crack ... eventually. Opt for good quality foundation and remember: Blend, blend, blend.
• Do: Give your cheeks some colour
o While foundation and powder can give you an even and uniformed look, it can also make you look flat. Use warm, earthy gold tones to give it a natural look. Women with dark skin tone should use brown shades.
• Don’t: Over-blush
o Unless you are part of the Chinese opera crew. Overuse of blush drags people’s attention from eyes to cheeks. Use a large brush, smile and apply it to the fleshy parts of the cheeks in a soft circular motion.
• Do: Choose the appropriate eye shadow colours
o Colours like peach, rose, beige, brown, gold will look good on almost anyone. As a finishing touch go for black mascara on both the upper and lower eyelids. Chic and decent eye makeup will highlight your natural beauty and looks simple but flattering for business meetings as well.
• Don't: Use shimmers and products that glitter
o A hint of shimmer is okay on the cheek bones to make you look healthy and vibrant, but glitter is not. If you can see chunks of shiny particles in the product, put it down and opt for something much more subtle
• Do: Look around you
o Makeup suitable for work depends greatly on where you work and what you do. A bright-red lip may not work in a corporate office but would look great on someone working in fashion. The key is to find a look that works for you and suits the environment you are in.
• Don’t: Go barefaced
o You need to look as fresh at 5pm as you did at 9am so do use some foundation and add colour to your face.
• Do: Look for long-lasting products.
o A waterproof mascara and long-wearing foundation will help you to look as fresh at 5pm as you did at 9am. Remember to touch up your lipstick or gloss, and use blotting powder to nix a shiny nose, throughout the day.
• Don't: Spend hours getting ready.
o You are not a doll. Office makeup should always make you look like an enhanced version of yourself, not a photoshopped version! Don’t spend more than 20 minutes in front of the mirror.
Healthy way to make it in business
By DIANA ROSLAM
Miss Yasotha Krishnan is no stranger to the business world. Despite being in this industry for less than 10 years, she has already paved her way to becoming one of the country's upcoming female entrepreneurs.
As the chief executive officer of Zazen Health Solutions (ZHS), she has taken the business to a level where it has become one of the most prominent brands in technology-based wellness in Malaysia. She has had her fair share of triumphs and hardships but these have not stopped her. This feisty lady is truly a force to be reckoned with. Composed, articulate and professional, she shares with us the ups and downs of her business and how she got to where she is today.
Have you always wanted to go into business?
Yes, I have a natural liking and interest in business. It’s funny because I studied social science in University Science Malaysia (USM) majoring in social work and minored in anthropology. It has nothing to do with business but I get excited when someone talks about business.
I had a small business dealing with hampers and souvenirs for six to eight months before joining my chairman, Dhyan Vimal, who is into training and development. We started a business from a technology we found, called Far Infrared. Having confidence in me, my chairman literally handed over the business to me.
Our first outlet was in Klang. I managed the business which was basically online with the help of my staff in Malaysia as I was away in Canada at that time. I was working as a trainer at the Dhyan Vimal School of Mastery in Canada. It was quite overwhelming when I came back in 2008 but it was a challenge I was ready to take.
What qualities of a CEO do you think you possess?
As a CEO, you have to be driven, energetic, focused and sharp, and you cannot allow yourself to be distracted. I am always on the move and I like to get things done by constantly thinking of business strategies and plans, and venturing into new and unknown markets. I learnt composure, making decisions and bringing visions to reality. These are the skills I learnt from the Mastery programme. It has given me strength, skill and the ability to be what I am today.
How do you feel on winning the Masterclass Women Entrepreneur of the Year 2010 at the Malaysia Business Leadership Awards?
Honestly, I thought it came too early but nevertheless, it has given me the motivation and drive to do more. Meeting successful business people such as Datuk Sri Dr Tony Fernandez (CEO of Air Asia), Datuk Sri Che Khalib Mohamad Noh (CEO of TNB), and Datuk Syed Zainal Abidin Syed Mohamed Tahir (CEO of Proton) made me think that I can also make difference in the business world.
In your opinion, why do some businesses fail?
Statistics have shown that almost 90% of young businesses fail within the first three years. Why is that? I think it happens when a business is not ready, has no strength to persevere or if the management is too cocky, doesn't want to learn or listen to advice. It is good to have a teacher sometimes. The chances of failing are high if you think you can learn and find out everything on your own.
What sort of challenges do you face in business?
Nothing is ever easy! Some of the challenges I face are to get the right people for the right job and making the right judgment call. In business, you are vulnerable to opportunities, both bad and good ones. You have to take time to assess the right opportunities and people, and making the distinction, whether they are strengths or chaos.
Another challenge that I face is progression. Projects do not happen as fast as you wish. It takes a lot of patience as it could be time consuming. I would love to do more campaigns, road shows and carnivals but funds are limited.
What are some of the perks of your job?
I think the best perk is that I have grown tremendously to become who I am now. I am now able to do things that I would’ve never imagined doing and I have mastered a lot of skills within myself. I have become very strong, steady and grounded.
I have met a lot of good people, too. I used to believe that there are not many good people around. Being in this business, I have come to see that there are a lot of good people out there. It’s whether you attract them to you.
How long has the company been in this industry?
It has been four years now. It has been an eye-opening experience and I believe it will get more interesting and exciting. At the moment, we are based in Malaysia but I am very committed to branch out to neighbouring countries such as Brunei, Vietnam, Indonesia, Singapore and even as far as India. We already have someone from Nigeria who will be expanding our business there. What are your aspirations for the company? I foresee this business expanding into a wellness centre or perhaps, our own hospital in the future, provided it works out and the direction is there.
Do you have any other plans for the company?
I’m in the midst of discussions with PLUS highway to install FIR systems at their R&R spots. We are also working with Felda (Federal Land Development Authority) to create health and awareness in the settlements. We plan to open up a few outlets in the first 100 settlements out of over 300 that they have. When the project goes through, it wouldn’t be just Zazen coming in; the hospitals and insurance companies will tag along to conduct health checks and offer health policies.
In the next couple of months, I will be keeping tabs on projects, looking for more people to come in to this business and creating health awareness amongst families in Malaysia.
There are many such health solutions in Malaysia. Do you think yours will survive the tough competition?
I believe we will because we are a dynamic team and we are adaptable to change. What we are doing is different in a sense that we do not push people and we are not loud, instead we are more inviting. We believe that the conventional sales method doesn’t work anymore. Gathering hundreds of people at a location wouldn’t work unless it’s beneficial to them. Humanity is evolving and you need to get with the flow of change. We have the skills, strengths, abilities and we have taken responsibility for our success and the work we are doing. We have an excellent product that speaks for itself; we only need the public to know that it is here and it is available.
You go about encouraging people to venture into your business. What does it take to move in this direction?
Entrepreneurs and those interested to join this business will go through the mastery programme. As much as passion and eagerness is vital, sometimes the absence of basic skills will causes them to fail and when they do, they will be frustrated and give up. Therefore, with every licensee, I would personally conduct this programme for them to be able to have the strength to grow and carry on the business.
There are two ways to join Zazen: you can either set up a conventional or unconventional outlet. A conventional outlet is normally a shop lot while the unconventional one would be in places such as condominiums, sundry shops, hotels, etc. The investment you need to fork out is low; you can open an outlet with just RM85,000 to RM125,000. A more elaborate outlet will cost around RM180,000.
You will be trained, taught and guided with basic structures and formulas. All you need to do is maintain the shop. You will be given brochures, marketing strategies, websites to refer to and customer support. You need to bring your own strength, capitalise on what has already been given and drive it to achieve success. Anyone can join us. You just need to be open to learning, passionate and willing to work.
What advice do you have for aspiring entrepreneurs?
First, you need to be disciplined because there is no short cut. You need to put in effort and the hours. People like Tiger Woods and Datuk Nicol David did not become champions in a day or two. It takes hours, days and years. You need to have discipline; train and prepare yourself to give that 100% if you want to run a business.
Every entrepreneur should make time for self-reflection. It helps them to see what and how they are doing things. Have something you believe in, work on it and you’ll be successful. I have watched people fail for the tiniest and silliest reasons.
My chairman used to say, “You don’t stumble over a mountain, you stumble over a pebble.” It’s critical as you need to be aware of the pebble. Sometimes you are so farsighted of the few million dollar contract but you oversee tiny things like paying for your bills and utilities.
Miss Yasotha Krishnan is no stranger to the business world. Despite being in this industry for less than 10 years, she has already paved her way to becoming one of the country's upcoming female entrepreneurs.
As the chief executive officer of Zazen Health Solutions (ZHS), she has taken the business to a level where it has become one of the most prominent brands in technology-based wellness in Malaysia. She has had her fair share of triumphs and hardships but these have not stopped her. This feisty lady is truly a force to be reckoned with. Composed, articulate and professional, she shares with us the ups and downs of her business and how she got to where she is today.
Have you always wanted to go into business?
Yes, I have a natural liking and interest in business. It’s funny because I studied social science in University Science Malaysia (USM) majoring in social work and minored in anthropology. It has nothing to do with business but I get excited when someone talks about business.
I had a small business dealing with hampers and souvenirs for six to eight months before joining my chairman, Dhyan Vimal, who is into training and development. We started a business from a technology we found, called Far Infrared. Having confidence in me, my chairman literally handed over the business to me.
Our first outlet was in Klang. I managed the business which was basically online with the help of my staff in Malaysia as I was away in Canada at that time. I was working as a trainer at the Dhyan Vimal School of Mastery in Canada. It was quite overwhelming when I came back in 2008 but it was a challenge I was ready to take.
What qualities of a CEO do you think you possess?
As a CEO, you have to be driven, energetic, focused and sharp, and you cannot allow yourself to be distracted. I am always on the move and I like to get things done by constantly thinking of business strategies and plans, and venturing into new and unknown markets. I learnt composure, making decisions and bringing visions to reality. These are the skills I learnt from the Mastery programme. It has given me strength, skill and the ability to be what I am today.
How do you feel on winning the Masterclass Women Entrepreneur of the Year 2010 at the Malaysia Business Leadership Awards?
Honestly, I thought it came too early but nevertheless, it has given me the motivation and drive to do more. Meeting successful business people such as Datuk Sri Dr Tony Fernandez (CEO of Air Asia), Datuk Sri Che Khalib Mohamad Noh (CEO of TNB), and Datuk Syed Zainal Abidin Syed Mohamed Tahir (CEO of Proton) made me think that I can also make difference in the business world.
In your opinion, why do some businesses fail?
Statistics have shown that almost 90% of young businesses fail within the first three years. Why is that? I think it happens when a business is not ready, has no strength to persevere or if the management is too cocky, doesn't want to learn or listen to advice. It is good to have a teacher sometimes. The chances of failing are high if you think you can learn and find out everything on your own.
What sort of challenges do you face in business?
Nothing is ever easy! Some of the challenges I face are to get the right people for the right job and making the right judgment call. In business, you are vulnerable to opportunities, both bad and good ones. You have to take time to assess the right opportunities and people, and making the distinction, whether they are strengths or chaos.
Another challenge that I face is progression. Projects do not happen as fast as you wish. It takes a lot of patience as it could be time consuming. I would love to do more campaigns, road shows and carnivals but funds are limited.
What are some of the perks of your job?
I think the best perk is that I have grown tremendously to become who I am now. I am now able to do things that I would’ve never imagined doing and I have mastered a lot of skills within myself. I have become very strong, steady and grounded.
I have met a lot of good people, too. I used to believe that there are not many good people around. Being in this business, I have come to see that there are a lot of good people out there. It’s whether you attract them to you.
How long has the company been in this industry?
It has been four years now. It has been an eye-opening experience and I believe it will get more interesting and exciting. At the moment, we are based in Malaysia but I am very committed to branch out to neighbouring countries such as Brunei, Vietnam, Indonesia, Singapore and even as far as India. We already have someone from Nigeria who will be expanding our business there. What are your aspirations for the company? I foresee this business expanding into a wellness centre or perhaps, our own hospital in the future, provided it works out and the direction is there.
Do you have any other plans for the company?
I’m in the midst of discussions with PLUS highway to install FIR systems at their R&R spots. We are also working with Felda (Federal Land Development Authority) to create health and awareness in the settlements. We plan to open up a few outlets in the first 100 settlements out of over 300 that they have. When the project goes through, it wouldn’t be just Zazen coming in; the hospitals and insurance companies will tag along to conduct health checks and offer health policies.
In the next couple of months, I will be keeping tabs on projects, looking for more people to come in to this business and creating health awareness amongst families in Malaysia.
There are many such health solutions in Malaysia. Do you think yours will survive the tough competition?
I believe we will because we are a dynamic team and we are adaptable to change. What we are doing is different in a sense that we do not push people and we are not loud, instead we are more inviting. We believe that the conventional sales method doesn’t work anymore. Gathering hundreds of people at a location wouldn’t work unless it’s beneficial to them. Humanity is evolving and you need to get with the flow of change. We have the skills, strengths, abilities and we have taken responsibility for our success and the work we are doing. We have an excellent product that speaks for itself; we only need the public to know that it is here and it is available.
You go about encouraging people to venture into your business. What does it take to move in this direction?
Entrepreneurs and those interested to join this business will go through the mastery programme. As much as passion and eagerness is vital, sometimes the absence of basic skills will causes them to fail and when they do, they will be frustrated and give up. Therefore, with every licensee, I would personally conduct this programme for them to be able to have the strength to grow and carry on the business.
There are two ways to join Zazen: you can either set up a conventional or unconventional outlet. A conventional outlet is normally a shop lot while the unconventional one would be in places such as condominiums, sundry shops, hotels, etc. The investment you need to fork out is low; you can open an outlet with just RM85,000 to RM125,000. A more elaborate outlet will cost around RM180,000.
You will be trained, taught and guided with basic structures and formulas. All you need to do is maintain the shop. You will be given brochures, marketing strategies, websites to refer to and customer support. You need to bring your own strength, capitalise on what has already been given and drive it to achieve success. Anyone can join us. You just need to be open to learning, passionate and willing to work.
What advice do you have for aspiring entrepreneurs?
First, you need to be disciplined because there is no short cut. You need to put in effort and the hours. People like Tiger Woods and Datuk Nicol David did not become champions in a day or two. It takes hours, days and years. You need to have discipline; train and prepare yourself to give that 100% if you want to run a business.
Every entrepreneur should make time for self-reflection. It helps them to see what and how they are doing things. Have something you believe in, work on it and you’ll be successful. I have watched people fail for the tiniest and silliest reasons.
My chairman used to say, “You don’t stumble over a mountain, you stumble over a pebble.” It’s critical as you need to be aware of the pebble. Sometimes you are so farsighted of the few million dollar contract but you oversee tiny things like paying for your bills and utilities.
A guide to performance appraisals
By DIANA ROSLAM
Have you heard of performance appraisals? If you are already working, you might have gone through one. If you haven’t though, it is actually a common procedure used to measure an employee’s performance. HR expert Dr George Koshy, who is director and senior consultant at CDC Consulting, explains what it's all about.
What is a performance appraisal?
A performance appraisal is a system to look at how an employee has performed within a span of time. Typically, at the end of the year, the employer shares with the employee feedback on his or her performance for the past 12 months; which areas that he or she has done well, areas of concern and how to improve for the following year. Those are the main purposes of the performance appraisal system.
What are the methods?
At the beginning of the year, the employee and the employer (or their immediate superior) has to sit down and decide what results should be achieved for the next 12 months, which is called Key Result Areas (KRA). The employees must be able to identify and find ways to measure their key result areas to gauge what they have done through Key Performance Indicators (KPI).
Therefore, you have to develop and stipulate KRAs and a few KPIs at the beginning of the year and review the results at the end of the year. That’s the main purpose. In order to fulfil your KRAs, you need to have competencies such as planning, leadership, communication skills, and so forth. The employer will also look at whether you are meeting the requirements of that level of job. If you are not meeting the level, we call it the training gap. To overcome this, employers will send you for human resource development activities such as courses and trainings to ensure you have the competency to fulfil your KRAs. Once you have a good system in place, this can be used as a basis of rewarding the employee in terms of annual increment and bonus.
Are these methods standardised?
Certain principles are but they have to be tailor-made to suit a company. For instance, if you are in a service industry, your KRAs should be slightly different from a manufacturing industry. Be that as it may, at the end of the day the question would be “What are things I’m held accountable for?” and “Have I achieved them or not?”
Do most companies practice this?
It’s a 50-50; many are in the process of implementing it but some have already started it; even the Government itself has introduced the KRAs.
Can employees in return, use this to question the employer if there is no improvement in salary and position?
They can highlight the matter. For instance, if I’ve been rated as a satisfactory when I have achieved my KRAs and KPIs, I can question why I am not being rewarded accordingly. If the company is doing very badly and it cannot afford to pay for that particular year, then that’s a separate question. But under normal circumstances, if the company is doing well, these performance indicators must be used as a means to reward the employees.
Should the employer meet with the employee prior to a performance appraisal?
Yes, definitely. They should have the first meeting at the beginning of the year to agree on what the KRAs and the KPIs will be.
In the middle of the year, they should have a review to see how things are progressing and whether they are on the right track, also to oversee the problems, if there are any. At the end of the year, a final discussion will be held to view the employee’s performance for the last 12 months.
An American statistician, professor, author and lecturer, W. Edwards Deming said that performance appraisals are an organisational evil that should be abolished.
What do you think about this statement?
I think there is an element of truth in what he says. He believes that performance appraisal systems are based on individual excellence. Everybody wants to achieve excellence as an individual; sometimes it could be at the expense of teamwork. In that sense, there may be a little bit of a defect in the system. However, I think it can be circumvented by introducing or instituting systems which also encourage teamwork. Companies have to take teamwork seriously, because without it, the company won’t grow and won’t be able to produce results.
The performance management process in an organisation has conflicting purposes. Some use it to determine merit increases and performance feedback for work done during a period of time and some use it to determine training needs and as a key tool in succession planning. Can performance appraisals serve all functions well?
Yes. But I think the most important thing is the system must be planned properly and there must be transparency; in the sense that all those involved and affected by the appraisal system must be aware of what it is. It has to be open as well.
Can the employer choose to make it formal or informal?
Quite often it is a mix of both. Sometimes, when you make it too formal, the employees will feel a bit reluctant to open up. When it comes to one-on-one appraisal or review, I think the employer has to be a bit cautious on how to put the employee at ease in order to get more information or feedback.
In your experience, how far does this system benefit a company?
I think it benefits a company tremendously because employees now know what they are supposed to do. This will help to increase the productivity of the employees. The sum total of the productivity of all the employees is what determines the success of an organisation.
Is there any criticism of performance appraisal as a whole?
I think the main criticism is if it is not properly planned and implemented. This could be a drawback but companies must be aware of this and take precautions to make sure it doesn’t happen.
Apart from going for performance appraisal training, what does an employer need to prepare for the review?
The system must be in place. If you want to implement a safety system in a company, the forms must be ready, the people need to be instructed on how to fill up the forms, how to use it, when to submit - all of this must be in place before the performance appraisal system is implemented. Other things that they should do - for example, filling up the form as a basis of discussion, followed by ratings (1 to 5) that are graded according to their performance for the past 12 months.
How should an employer keep track of an employee’s performance? Would it be on a day-to-day basis or should it be noted as and when it happens?
More often not performance appraisals are a daily affair, but having said that, I don’t think that every manager can afford to spend time monitoring every employee's moves. I think it has to be done on a regular basis; every once in two months, or once in a quarter. Some companies do it once in six months, or mid-year appraisals. Having said that, I think it’s essential that managers are aware that appraisals are an ongoing process.
Do you think employers should check with other employees for feedback?
If you’re trying to get feedback from the employee's peers, his subordinates, his customers, both internal and external, that is called 360 degrees feedback. Companies that want to adopt it must be ready for it, as it requires a fair amount of effort to institute that system. It is probably for the better if a company that has just started with performance appraisals not go into this straightaway as it should see how the progress is and only roll it out during the second or third year.
What are the ways that employees can progress?
It’s a question of which areas you feel you need to work on; then you should go for a course that is relevant to that. For instance, if you have the knowledge but not confidence and don’t know how to express your ideas, then you should go for a course such as presentation skills or effective speaking skills. These are the short programmes that you can go for to further equip yourself.
How should an employer deal with an employee who recently went through a life-changing experience, such as divorce or death?
You should take that into account but it should not be the defining criteria. You are the employee and you owe it to yourself to contribute to the company because they pay you the salary. But having said that, the employer should also understand that during certain phases in their lives they go through problems and the employers should accommodate that.
How do you appraise someone older and more experienced?
You have to listen to what he has to say. As long as you are professional about it, I think there shouldn’t be any problem. The younger the employee is, the more reluctant he is to open up. As an employer, you have to encourage the employee to speak up, make the environment more comfortable or talk about things that are important to him rather than starting the whole appraisal by saying that he hasn’t performed. Try to say things that won’t put off the employee; you have to do encourage him first before going straight into details.
What is the difference between appraising a new employee and an experienced one?
When an employee has just joined a company, he or she won't be appraised. You must be working with the company for at least 12 months before you are appraised. However, I can look at your progress if you are a new employee because if you are new, how much can you contribute? You are still learning, gathering information, getting to know the ropes and the people. Monitoring the progress of a new employee is very important but you don’t do appraisal for a new employee straightaway as you might put off the employee.
Any comments you would like to add?
Performance appraisals are basically a dialogue and motivation, not a monologue. I personally think the most important thing is that the employer has to be 100% committed to this system. It is not merely lip service. It has to be done in all sincerity for it to be a good system. The employees would be better workers, the productivity level will go up and companies would benefit from it.
Have you heard of performance appraisals? If you are already working, you might have gone through one. If you haven’t though, it is actually a common procedure used to measure an employee’s performance. HR expert Dr George Koshy, who is director and senior consultant at CDC Consulting, explains what it's all about.
What is a performance appraisal?
A performance appraisal is a system to look at how an employee has performed within a span of time. Typically, at the end of the year, the employer shares with the employee feedback on his or her performance for the past 12 months; which areas that he or she has done well, areas of concern and how to improve for the following year. Those are the main purposes of the performance appraisal system.
What are the methods?
At the beginning of the year, the employee and the employer (or their immediate superior) has to sit down and decide what results should be achieved for the next 12 months, which is called Key Result Areas (KRA). The employees must be able to identify and find ways to measure their key result areas to gauge what they have done through Key Performance Indicators (KPI).
Therefore, you have to develop and stipulate KRAs and a few KPIs at the beginning of the year and review the results at the end of the year. That’s the main purpose. In order to fulfil your KRAs, you need to have competencies such as planning, leadership, communication skills, and so forth. The employer will also look at whether you are meeting the requirements of that level of job. If you are not meeting the level, we call it the training gap. To overcome this, employers will send you for human resource development activities such as courses and trainings to ensure you have the competency to fulfil your KRAs. Once you have a good system in place, this can be used as a basis of rewarding the employee in terms of annual increment and bonus.
Are these methods standardised?
Certain principles are but they have to be tailor-made to suit a company. For instance, if you are in a service industry, your KRAs should be slightly different from a manufacturing industry. Be that as it may, at the end of the day the question would be “What are things I’m held accountable for?” and “Have I achieved them or not?”
Do most companies practice this?
It’s a 50-50; many are in the process of implementing it but some have already started it; even the Government itself has introduced the KRAs.
Can employees in return, use this to question the employer if there is no improvement in salary and position?
They can highlight the matter. For instance, if I’ve been rated as a satisfactory when I have achieved my KRAs and KPIs, I can question why I am not being rewarded accordingly. If the company is doing very badly and it cannot afford to pay for that particular year, then that’s a separate question. But under normal circumstances, if the company is doing well, these performance indicators must be used as a means to reward the employees.
Should the employer meet with the employee prior to a performance appraisal?
Yes, definitely. They should have the first meeting at the beginning of the year to agree on what the KRAs and the KPIs will be.
In the middle of the year, they should have a review to see how things are progressing and whether they are on the right track, also to oversee the problems, if there are any. At the end of the year, a final discussion will be held to view the employee’s performance for the last 12 months.
An American statistician, professor, author and lecturer, W. Edwards Deming said that performance appraisals are an organisational evil that should be abolished.
What do you think about this statement?
I think there is an element of truth in what he says. He believes that performance appraisal systems are based on individual excellence. Everybody wants to achieve excellence as an individual; sometimes it could be at the expense of teamwork. In that sense, there may be a little bit of a defect in the system. However, I think it can be circumvented by introducing or instituting systems which also encourage teamwork. Companies have to take teamwork seriously, because without it, the company won’t grow and won’t be able to produce results.
The performance management process in an organisation has conflicting purposes. Some use it to determine merit increases and performance feedback for work done during a period of time and some use it to determine training needs and as a key tool in succession planning. Can performance appraisals serve all functions well?
Yes. But I think the most important thing is the system must be planned properly and there must be transparency; in the sense that all those involved and affected by the appraisal system must be aware of what it is. It has to be open as well.
Can the employer choose to make it formal or informal?
Quite often it is a mix of both. Sometimes, when you make it too formal, the employees will feel a bit reluctant to open up. When it comes to one-on-one appraisal or review, I think the employer has to be a bit cautious on how to put the employee at ease in order to get more information or feedback.
In your experience, how far does this system benefit a company?
I think it benefits a company tremendously because employees now know what they are supposed to do. This will help to increase the productivity of the employees. The sum total of the productivity of all the employees is what determines the success of an organisation.
Is there any criticism of performance appraisal as a whole?
I think the main criticism is if it is not properly planned and implemented. This could be a drawback but companies must be aware of this and take precautions to make sure it doesn’t happen.
Apart from going for performance appraisal training, what does an employer need to prepare for the review?
The system must be in place. If you want to implement a safety system in a company, the forms must be ready, the people need to be instructed on how to fill up the forms, how to use it, when to submit - all of this must be in place before the performance appraisal system is implemented. Other things that they should do - for example, filling up the form as a basis of discussion, followed by ratings (1 to 5) that are graded according to their performance for the past 12 months.
How should an employer keep track of an employee’s performance? Would it be on a day-to-day basis or should it be noted as and when it happens?
More often not performance appraisals are a daily affair, but having said that, I don’t think that every manager can afford to spend time monitoring every employee's moves. I think it has to be done on a regular basis; every once in two months, or once in a quarter. Some companies do it once in six months, or mid-year appraisals. Having said that, I think it’s essential that managers are aware that appraisals are an ongoing process.
Do you think employers should check with other employees for feedback?
If you’re trying to get feedback from the employee's peers, his subordinates, his customers, both internal and external, that is called 360 degrees feedback. Companies that want to adopt it must be ready for it, as it requires a fair amount of effort to institute that system. It is probably for the better if a company that has just started with performance appraisals not go into this straightaway as it should see how the progress is and only roll it out during the second or third year.
What are the ways that employees can progress?
It’s a question of which areas you feel you need to work on; then you should go for a course that is relevant to that. For instance, if you have the knowledge but not confidence and don’t know how to express your ideas, then you should go for a course such as presentation skills or effective speaking skills. These are the short programmes that you can go for to further equip yourself.
How should an employer deal with an employee who recently went through a life-changing experience, such as divorce or death?
You should take that into account but it should not be the defining criteria. You are the employee and you owe it to yourself to contribute to the company because they pay you the salary. But having said that, the employer should also understand that during certain phases in their lives they go through problems and the employers should accommodate that.
How do you appraise someone older and more experienced?
You have to listen to what he has to say. As long as you are professional about it, I think there shouldn’t be any problem. The younger the employee is, the more reluctant he is to open up. As an employer, you have to encourage the employee to speak up, make the environment more comfortable or talk about things that are important to him rather than starting the whole appraisal by saying that he hasn’t performed. Try to say things that won’t put off the employee; you have to do encourage him first before going straight into details.
What is the difference between appraising a new employee and an experienced one?
When an employee has just joined a company, he or she won't be appraised. You must be working with the company for at least 12 months before you are appraised. However, I can look at your progress if you are a new employee because if you are new, how much can you contribute? You are still learning, gathering information, getting to know the ropes and the people. Monitoring the progress of a new employee is very important but you don’t do appraisal for a new employee straightaway as you might put off the employee.
Any comments you would like to add?
Performance appraisals are basically a dialogue and motivation, not a monologue. I personally think the most important thing is that the employer has to be 100% committed to this system. It is not merely lip service. It has to be done in all sincerity for it to be a good system. The employees would be better workers, the productivity level will go up and companies would benefit from it.
Friday, November 05, 2010
Value-driven leadership vital for sustainable success
Leadership is a crucial enabling factor in an organisation’s success, while values determine the direction of the organisational vision and the way it conducts itself at all times to serve and achieve its purpose.
An organisation in which the leadership is driven by positive values and ethics develops the capability and sustainability to face all challenges, even in turbulent times.
Value-driven leadership is based on the notion that the performance and behaviour of leaders in the organisation are guided by the adherence to and practice of “core values” that include integrity, honesty, fairness, consistency, accountability, due care, fiduciary duty, professionalism and ethical practices.
It recognises that an organisation cannot survive in the long term if it does not do the “right and proper thing”, and does not have the participation of all the stakeholders — employees, customers, investors, government, local and global communities — bonded by a value system.
Why value-driven leadership?
Value-driven leadership realises that the pursuit of profit is only one of the many essentials for sustainable organisation success.
Value-driven leadership combines personal principles, values and corporate ethics with commercial sustainability considerations. The term “value” alludes to the nature of the relationship between the organisation and those with whom it does business or has a relationship.
For example, an employee might experience a valued relationship with an organisation if the latter paid a fair wage and gave him time off to care for a sick parent. Another employee might value the relationship if the organisation gave him sufficient training and career development opportunities.
Organisations battle to create superior value for the “best” employees, customers, investors and communities. Winning these battles yields superior returns for investors because the “best” people generate the most effective and efficient solutions to customer needs and problems. The end result is profit. And through profit-sharing and stock ownership, employees and investors share in the gains.
Value-driven leadership is a must in modern, flat organisations characterised by transparency and easy availability of information.
As Steve Jobs, the co-founder of Apple Inc, asserts: “The only thing that works is management and leadership by values. Find people who are competent and really bright, but more importantly, people who care exactly about the same things you care about.”
Jim Collins wrote in his bestseller, Good to Great, that “Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great organisation. It’s not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious, but their ambition is first and foremost for the institution, not themselves.” Level 5 leaders practise value-driven leadership that enhances the relationship between an organisation and its employees, customers and communities.
Take the airline industry, for instance. Some customers value cheap fares, on-time flight departures and arrivals, and pleasant staff. By focusing on these values, AirAsia successfully became Asia’s leading low-fare airline.
Below are some management insights to implement value-driven leadership in your organisation:
Management insight #1:
Inspiring people with key values
Leaders must be able to lead, develop and inspire their people. Value-driven organisations will tend to develop value-driven leaders, and value-driven leaders will create value over time for their organisations.
Value-driven leaders must practise what they preach and create explicit and intrinsic value for their organisation that goes far beyond shareholder value. They do not neglect profitability as an important corporate goal — as a value — but it is integrated with other intrinsic and performance values that permeate the organisation’s decision-making, actions and behaviours.
Management insight #2:
Dealing positively with others
Value-driven leaders engage in pro-active cooperation when dealing with people in and outside the organisation. They are able to influence and convince others with their ethical dealings, and look at the future as a source of opportunity and business sustainability.
Internal or external customers get better service from employees in value-driven organisations who enjoy their jobs. Hence, value-driven business makes for good long-term business.
Companies, such as Southwest Airlines, invest significantly in identifying the characteristics of people who enjoy serving customers. They hire people who embody their values, thus making them more successful than their peers, for instance, American Airlines.
A popular saying in recruitment goes: “We hire people for what they know and fire them for who they are.” Therefore, when we hire people with the same values, we spend less time managing deviant behaviours.
Management insight #3:
Adding value across the board
Value-driven leaders are result-focused, interact constantly with their stakeholders, and improve by seeking and introducing value innovations to satisfy their customers.
For example, executives seeking to enhance employee satisfaction and deliver excellent customer service can best do so by valuing human relationships and fostering teamwork. Executives seeking to improve market share, accelerate earnings growth and return on equity, as well as enhance shareholder values can embrace the principle of “winning through multiple means”.
Today’s customers are very astute and prefer to do business with companies and people who are ethical and practise good values.
Management insight #4:
Opening up for sustainability
Value-driven leaders are interactive, engaging and synergistic. They can conceptualise the highest level of win-win outcomes for their organisation and employees, thus helping their people to remain fulfilled throughout their work life.
Such leaders leave behind their strong value footprints for successive generations. The value-driven leader and his management team create their own strong, intrinsic and intangible capital that is enhanced by each generation immersed in the culture.
These are the organisations that have the capacity to live forever.
Studies show that organisations that practise these values outperform those that don’t. By rooting good judgement and common sense into the organisational culture, value-driven leadership can be a powerful means of creating value for the organisation as well as a useful management philosophy.
Dr Wilson Tay is CEO of the Malaysian Institute of Management (MIM)
An organisation in which the leadership is driven by positive values and ethics develops the capability and sustainability to face all challenges, even in turbulent times.
Value-driven leadership is based on the notion that the performance and behaviour of leaders in the organisation are guided by the adherence to and practice of “core values” that include integrity, honesty, fairness, consistency, accountability, due care, fiduciary duty, professionalism and ethical practices.
It recognises that an organisation cannot survive in the long term if it does not do the “right and proper thing”, and does not have the participation of all the stakeholders — employees, customers, investors, government, local and global communities — bonded by a value system.
Why value-driven leadership?
Value-driven leadership realises that the pursuit of profit is only one of the many essentials for sustainable organisation success.
Value-driven leadership combines personal principles, values and corporate ethics with commercial sustainability considerations. The term “value” alludes to the nature of the relationship between the organisation and those with whom it does business or has a relationship.
For example, an employee might experience a valued relationship with an organisation if the latter paid a fair wage and gave him time off to care for a sick parent. Another employee might value the relationship if the organisation gave him sufficient training and career development opportunities.
Organisations battle to create superior value for the “best” employees, customers, investors and communities. Winning these battles yields superior returns for investors because the “best” people generate the most effective and efficient solutions to customer needs and problems. The end result is profit. And through profit-sharing and stock ownership, employees and investors share in the gains.
Value-driven leadership is a must in modern, flat organisations characterised by transparency and easy availability of information.
As Steve Jobs, the co-founder of Apple Inc, asserts: “The only thing that works is management and leadership by values. Find people who are competent and really bright, but more importantly, people who care exactly about the same things you care about.”
Jim Collins wrote in his bestseller, Good to Great, that “Level 5 leaders channel their ego needs away from themselves and into the larger goal of building a great organisation. It’s not that Level 5 leaders have no ego or self-interest. Indeed, they are incredibly ambitious, but their ambition is first and foremost for the institution, not themselves.” Level 5 leaders practise value-driven leadership that enhances the relationship between an organisation and its employees, customers and communities.
Take the airline industry, for instance. Some customers value cheap fares, on-time flight departures and arrivals, and pleasant staff. By focusing on these values, AirAsia successfully became Asia’s leading low-fare airline.
Below are some management insights to implement value-driven leadership in your organisation:
Management insight #1:
Inspiring people with key values
Leaders must be able to lead, develop and inspire their people. Value-driven organisations will tend to develop value-driven leaders, and value-driven leaders will create value over time for their organisations.
Value-driven leaders must practise what they preach and create explicit and intrinsic value for their organisation that goes far beyond shareholder value. They do not neglect profitability as an important corporate goal — as a value — but it is integrated with other intrinsic and performance values that permeate the organisation’s decision-making, actions and behaviours.
Management insight #2:
Dealing positively with others
Value-driven leaders engage in pro-active cooperation when dealing with people in and outside the organisation. They are able to influence and convince others with their ethical dealings, and look at the future as a source of opportunity and business sustainability.
Internal or external customers get better service from employees in value-driven organisations who enjoy their jobs. Hence, value-driven business makes for good long-term business.
Companies, such as Southwest Airlines, invest significantly in identifying the characteristics of people who enjoy serving customers. They hire people who embody their values, thus making them more successful than their peers, for instance, American Airlines.
A popular saying in recruitment goes: “We hire people for what they know and fire them for who they are.” Therefore, when we hire people with the same values, we spend less time managing deviant behaviours.
Management insight #3:
Adding value across the board
Value-driven leaders are result-focused, interact constantly with their stakeholders, and improve by seeking and introducing value innovations to satisfy their customers.
For example, executives seeking to enhance employee satisfaction and deliver excellent customer service can best do so by valuing human relationships and fostering teamwork. Executives seeking to improve market share, accelerate earnings growth and return on equity, as well as enhance shareholder values can embrace the principle of “winning through multiple means”.
Today’s customers are very astute and prefer to do business with companies and people who are ethical and practise good values.
Management insight #4:
Opening up for sustainability
Value-driven leaders are interactive, engaging and synergistic. They can conceptualise the highest level of win-win outcomes for their organisation and employees, thus helping their people to remain fulfilled throughout their work life.
Such leaders leave behind their strong value footprints for successive generations. The value-driven leader and his management team create their own strong, intrinsic and intangible capital that is enhanced by each generation immersed in the culture.
These are the organisations that have the capacity to live forever.
Studies show that organisations that practise these values outperform those that don’t. By rooting good judgement and common sense into the organisational culture, value-driven leadership can be a powerful means of creating value for the organisation as well as a useful management philosophy.
Dr Wilson Tay is CEO of the Malaysian Institute of Management (MIM)
Don’t be afraid of Gen Y?
Technology is what sets Generation Y — and even Generation X — apart from the baby boomers, according to leadership guru Paul Bridle.
And until the baby boomers, most of whom are now in their 50s and in managerial or senior positions, understand the mentality of this new workforce generation, trying to manage them would be akin to trying to manage a group of Martians, he said.
“Gen Y-ers have been brought up by technology. Have you seen them play a computer game? Once they lose the game, they just press the reset button and start again,” the leadership methodologist and consultant told an audience of managers and business leaders.
The UK-based Bridle, who is a faculty member at the Institute for Management Studies, was speaking on the topic, Leading the Future Employee, at a one-day seminar organised by Taylor’s Business School in May.
According to him, this “reset mentality” is an alien concept to baby boomers. While baby boomers may think they have accumulated 20 years of working experience, to a Gen Y, it just means one year of work experience multiplied by 20 years, he said to laughter from the 140-odd audience.
Currently the youngest cohort in the workforce, Gen Y is commonly defined as the population born between 1978 and 1997. This group, also known as the “digital natives”, is keenly studied by managers and marketers as the workers and consumers of the future.
Gen X typically refers to those born between 1965 and 1977, while baby boomers are those born between 1946 and 1964 — before the age of the Internet.
Addressing a common gripe among managers that Gen Y-ers tend to job hop, Bridle advised against the usual strategy of offering more money to entice them to stay.
A recent PricewaterhouseCoopers survey titled Malaysia’s Gen Y Unplugged showed that Gen Y-ers rated flexible work hours as most important (57%), with cash bonuses coming in second (49%).
“Offering more money may make them stay another six months or a year, but they won’t perform well. You should focus on those who do stay and want to be challenged. They’ll be here for another two to three years, so get the best out of them instead of wasting inordinate amounts of money to make them stay,” Bridle added.
Another no-no that drives young workers away is cutting off their access to social networking sites at the workplace. “Social networking is a very powerful part of the younger generation, and trying to block them (from it) isn’t the wisest thing to do,” Bridle cautioned.
Explaining, he said Gen X-ers and Y-ers receive feedback and ideas through social networking: One could post a status message on his or her Facebook and get feedback within minutes.
Instead of trying to manage their young employees with the old rules, managers need to engage them by understanding what they want, which is a lifestyle.
“We now live in an age where everyone wants a lifestyle. The baby boomers feel they deserve it. The Gen X and Y want it now. (They’re thinking) why wait for it?” Bridle said.
Also, Gen X-ers and Y-ers disdain the usual team-building exercises that companies carry out, although they are eager to learn and will work with even those they dislike, as long as they benefit from it, according to Bridle.
“Teamwork is dead, long live teams that work,” he said. “It’s not about bonding but what benefits everyone. The younger generation thinks this is cool, but baby boomers are frightened of it. You shouldn’t be.
“You put together team A and while they’re working, you’re already setting up team B. That’s what Alex Ferguson (manager of Manchester United Football Club) has been doing all these years. He’s even pushed the best players out the door.”
The South African-born Bridle then cited the example of how Francesco Zanasi, co-founder and executive director of award-winning South African restaurant chain Primi Piatti, attracted his Gen Y employees even though he could not afford the salary they wanted.
Instead, he offered them career growth. Understanding that outstanding service came from empowered and confident staff, he provided his employees with haircuts, facials and new clothes. He also gave them language lessons to improve their English, and training sessions in which he and the employees take turns role-playing as customers and waiting staff.
The strategy worked: There are now around 30 Primi Piatti outlets throughout South Africa, and the chain has won numerous national awards. It was even voted one of the country’s “Top 10 Coolest Eat Out Places” in the 2008 Generation Next Youth Brand Survey, showing Zanasi has embraced Gen X-ers and Y-ers as customers.
“This Gen X and Y — it’s not something to be afraid of,” Bridle said. “They’re not just your employees but also your customers. How are you going to attract them if your company is only filled with baby boomers?”
However, he concluded that the key factor for managers is treating every employee as an individual, no matter their age. “You give them confidence and help them set their personal goals. You have people working for you, can’t you be interested in knowing what their dreams are?”
To help employees achieve their dreams, managers should create a surrounding where they could flourish, like Zanasi. But this did not mean it was the manager’s job to motivate his staff, an oft-held misconception.
“It’s not your job to motivate people. Your job is to create an environment that motivates them,” noted Bridle.
And until the baby boomers, most of whom are now in their 50s and in managerial or senior positions, understand the mentality of this new workforce generation, trying to manage them would be akin to trying to manage a group of Martians, he said.
“Gen Y-ers have been brought up by technology. Have you seen them play a computer game? Once they lose the game, they just press the reset button and start again,” the leadership methodologist and consultant told an audience of managers and business leaders.
The UK-based Bridle, who is a faculty member at the Institute for Management Studies, was speaking on the topic, Leading the Future Employee, at a one-day seminar organised by Taylor’s Business School in May.
According to him, this “reset mentality” is an alien concept to baby boomers. While baby boomers may think they have accumulated 20 years of working experience, to a Gen Y, it just means one year of work experience multiplied by 20 years, he said to laughter from the 140-odd audience.
Currently the youngest cohort in the workforce, Gen Y is commonly defined as the population born between 1978 and 1997. This group, also known as the “digital natives”, is keenly studied by managers and marketers as the workers and consumers of the future.
Gen X typically refers to those born between 1965 and 1977, while baby boomers are those born between 1946 and 1964 — before the age of the Internet.
Addressing a common gripe among managers that Gen Y-ers tend to job hop, Bridle advised against the usual strategy of offering more money to entice them to stay.
A recent PricewaterhouseCoopers survey titled Malaysia’s Gen Y Unplugged showed that Gen Y-ers rated flexible work hours as most important (57%), with cash bonuses coming in second (49%).
“Offering more money may make them stay another six months or a year, but they won’t perform well. You should focus on those who do stay and want to be challenged. They’ll be here for another two to three years, so get the best out of them instead of wasting inordinate amounts of money to make them stay,” Bridle added.
Another no-no that drives young workers away is cutting off their access to social networking sites at the workplace. “Social networking is a very powerful part of the younger generation, and trying to block them (from it) isn’t the wisest thing to do,” Bridle cautioned.
Explaining, he said Gen X-ers and Y-ers receive feedback and ideas through social networking: One could post a status message on his or her Facebook and get feedback within minutes.
Instead of trying to manage their young employees with the old rules, managers need to engage them by understanding what they want, which is a lifestyle.
“We now live in an age where everyone wants a lifestyle. The baby boomers feel they deserve it. The Gen X and Y want it now. (They’re thinking) why wait for it?” Bridle said.
Also, Gen X-ers and Y-ers disdain the usual team-building exercises that companies carry out, although they are eager to learn and will work with even those they dislike, as long as they benefit from it, according to Bridle.
“Teamwork is dead, long live teams that work,” he said. “It’s not about bonding but what benefits everyone. The younger generation thinks this is cool, but baby boomers are frightened of it. You shouldn’t be.
“You put together team A and while they’re working, you’re already setting up team B. That’s what Alex Ferguson (manager of Manchester United Football Club) has been doing all these years. He’s even pushed the best players out the door.”
The South African-born Bridle then cited the example of how Francesco Zanasi, co-founder and executive director of award-winning South African restaurant chain Primi Piatti, attracted his Gen Y employees even though he could not afford the salary they wanted.
Instead, he offered them career growth. Understanding that outstanding service came from empowered and confident staff, he provided his employees with haircuts, facials and new clothes. He also gave them language lessons to improve their English, and training sessions in which he and the employees take turns role-playing as customers and waiting staff.
The strategy worked: There are now around 30 Primi Piatti outlets throughout South Africa, and the chain has won numerous national awards. It was even voted one of the country’s “Top 10 Coolest Eat Out Places” in the 2008 Generation Next Youth Brand Survey, showing Zanasi has embraced Gen X-ers and Y-ers as customers.
“This Gen X and Y — it’s not something to be afraid of,” Bridle said. “They’re not just your employees but also your customers. How are you going to attract them if your company is only filled with baby boomers?”
However, he concluded that the key factor for managers is treating every employee as an individual, no matter their age. “You give them confidence and help them set their personal goals. You have people working for you, can’t you be interested in knowing what their dreams are?”
To help employees achieve their dreams, managers should create a surrounding where they could flourish, like Zanasi. But this did not mean it was the manager’s job to motivate his staff, an oft-held misconception.
“It’s not your job to motivate people. Your job is to create an environment that motivates them,” noted Bridle.
Recession? Time to strengthen your company
Who’s got time to worry about building a stronger organisation in a downturn? Surely executives can’t focus on internal issues when they face so many other pressing matters?
But this is exactly the time when leaders need to ensure their organisations are performing well, so that important decisions get made and executed quickly and effectively.
Turbulence offers a rare chance to bring in new talent and improve the way that organisations function.
The trouble is that companies under duress often lack the organisational capabilities to meet mounting challenges. Some make snap decisions. Others stall, unable to decide. Yet others badly need new people to bring fresh perspectives or help them overhaul dysfunctional cultures.
Strengthening the organisation is one of the most powerful levers any company can pull to improve its performance in a downturn. It starts by asking a series of questions:
1) What are the critical decisions in this downturn?
2) Do we need to adjust our organisational structure to address them effectively?
3) How should our roles and processes change?
4) Will our most experienced people be able to make and execute key decisions?
5) Which aspects of our culture reinforce decision effectiveness, and which don’t?
Adopting this “decision lens” is the single most important step that a company can take to improve its performance.
It helps leaders focus their efforts where they will have the most impact during a downturn and accelerate growth when the economy improves.
1) Identifying the critical decisions
Every company has its critical decisions. If your business is in relatively good shape, those decisions may not have changed much. Some will be the big choices, like whether to acquire a competitor or invest in a new product. Others may be everyday frontline decisions.
Toyota, for example, achieved its leading position partly through its reputation for manufacturing quality. To maintain that quality, the carmaker ensures that workers in every plant know how to make and execute the right quality-related decisions.
These decisions are as important now as when Toyota was growing rapidly.
If you are in survival mode, your critical decisions will be different, such as whether to sell a stake or overhaul the business model.
2) Testing the structure
Sometimes structure is a serious obstacle to making and executing a business’ critical decisions.
In that case, structure must change.
Previously, Hewlett-Packard’s salesforce was organised by customers while its manufacturing units were organised by products. With stalled decisions and people working at cross purposes, performance suffered.
The IT firm then moved to a product-based structure across the entire company, with accountabilities for decisions clearly defined. That created the conditions for better decision-making and execution, which in turn generated higher profits.
3) Clarifying roles and processes
Whatever a company’s structure, decision roles need to be clear. Unless people know who is responsible for making and executing critical decisions, stress on an organisation will only increase.
A tool we call RAPID® clarifies accountabilities for each part of these decisions:
• The individual or team responsible for a Recommendation gathers relevant information and proposes a course of action.
• People with Input responsibilities help shape a recommendation so it is operationally practical and financially feasible.
• An executive who must Agree is anyone who needs to sign off, often a legal or regulatory compliance officer.
• Eventually, one person will Decide. Assigning the “D” to one individual ensures single-point accountability.
• The final role in the process involves the people who will Perform or execute the decision.
Clear decision roles are essential amid turbulence. They can boost performance by unclogging bottlenecks and cutting the organisation’s cycle time.
4) Right people in right roles
In good times, companies focus on managing growing organisations. In a recession, the logic changes. Many companies cut costs through layoffs and attrition.
But the people who leave are not always the poorest performers. Those who stay may not have the skills to make and execute decisions. And companies often fail to consider who they might hire to bolster their capabilities.
In a downturn, no company can afford to have the wrong people in key decision roles.
At one IT company, we found that more than 40% of the managers identified as high performers were in non-critical positions. Meanwhile, fewer than 40% in mission-critical roles were top performers. The senior team quickly corrected the mismatch, and business performance immediately improved.
The key to making the best use of people is a robust, effective, performance-management system that has real consequences.
5) Actively managing the culture
Culture underpins an organisation’s decisions. But cultures change and are particularly susceptible to change when an organisation is in crisis.
In a downturn, leaders need to take action to keep a strong culture from deteriorating — or to transform a culture that hinders good decisions.
Understanding that its culture is a competitive advantage, Southwest Airlines reinforces it in hard times.
In the early stages of the current recession, it maintained staff loyalty (through no involuntary job cuts) and invested in upgrading customer service. The carrier continues to be one of the US leaders for on-time performance, an aspect of the business that customers care deeply about.
A strong organisation is not optional, something to worry about after the crisis. Your organisation’s strength will greatly affect how well your company weathers the storm.
It will also strongly improve your chances for growth once the storm passes.
by Simeon Preston is a partner with Bain & Company and a leader in the firm’s Southeast Asia Organisation practice. Marcia Blenko is a partner and leads Bain’s Global Organisation practice. Adapted from the forthcoming book, Winning in Turbulence, by Bain & Company, published by Harvard Business Press.
But this is exactly the time when leaders need to ensure their organisations are performing well, so that important decisions get made and executed quickly and effectively.
Turbulence offers a rare chance to bring in new talent and improve the way that organisations function.
The trouble is that companies under duress often lack the organisational capabilities to meet mounting challenges. Some make snap decisions. Others stall, unable to decide. Yet others badly need new people to bring fresh perspectives or help them overhaul dysfunctional cultures.
Strengthening the organisation is one of the most powerful levers any company can pull to improve its performance in a downturn. It starts by asking a series of questions:
1) What are the critical decisions in this downturn?
2) Do we need to adjust our organisational structure to address them effectively?
3) How should our roles and processes change?
4) Will our most experienced people be able to make and execute key decisions?
5) Which aspects of our culture reinforce decision effectiveness, and which don’t?
Adopting this “decision lens” is the single most important step that a company can take to improve its performance.
It helps leaders focus their efforts where they will have the most impact during a downturn and accelerate growth when the economy improves.
1) Identifying the critical decisions
Every company has its critical decisions. If your business is in relatively good shape, those decisions may not have changed much. Some will be the big choices, like whether to acquire a competitor or invest in a new product. Others may be everyday frontline decisions.
Toyota, for example, achieved its leading position partly through its reputation for manufacturing quality. To maintain that quality, the carmaker ensures that workers in every plant know how to make and execute the right quality-related decisions.
These decisions are as important now as when Toyota was growing rapidly.
If you are in survival mode, your critical decisions will be different, such as whether to sell a stake or overhaul the business model.
2) Testing the structure
Sometimes structure is a serious obstacle to making and executing a business’ critical decisions.
In that case, structure must change.
Previously, Hewlett-Packard’s salesforce was organised by customers while its manufacturing units were organised by products. With stalled decisions and people working at cross purposes, performance suffered.
The IT firm then moved to a product-based structure across the entire company, with accountabilities for decisions clearly defined. That created the conditions for better decision-making and execution, which in turn generated higher profits.
3) Clarifying roles and processes
Whatever a company’s structure, decision roles need to be clear. Unless people know who is responsible for making and executing critical decisions, stress on an organisation will only increase.
A tool we call RAPID® clarifies accountabilities for each part of these decisions:
• The individual or team responsible for a Recommendation gathers relevant information and proposes a course of action.
• People with Input responsibilities help shape a recommendation so it is operationally practical and financially feasible.
• An executive who must Agree is anyone who needs to sign off, often a legal or regulatory compliance officer.
• Eventually, one person will Decide. Assigning the “D” to one individual ensures single-point accountability.
• The final role in the process involves the people who will Perform or execute the decision.
Clear decision roles are essential amid turbulence. They can boost performance by unclogging bottlenecks and cutting the organisation’s cycle time.
4) Right people in right roles
In good times, companies focus on managing growing organisations. In a recession, the logic changes. Many companies cut costs through layoffs and attrition.
But the people who leave are not always the poorest performers. Those who stay may not have the skills to make and execute decisions. And companies often fail to consider who they might hire to bolster their capabilities.
In a downturn, no company can afford to have the wrong people in key decision roles.
At one IT company, we found that more than 40% of the managers identified as high performers were in non-critical positions. Meanwhile, fewer than 40% in mission-critical roles were top performers. The senior team quickly corrected the mismatch, and business performance immediately improved.
The key to making the best use of people is a robust, effective, performance-management system that has real consequences.
5) Actively managing the culture
Culture underpins an organisation’s decisions. But cultures change and are particularly susceptible to change when an organisation is in crisis.
In a downturn, leaders need to take action to keep a strong culture from deteriorating — or to transform a culture that hinders good decisions.
Understanding that its culture is a competitive advantage, Southwest Airlines reinforces it in hard times.
In the early stages of the current recession, it maintained staff loyalty (through no involuntary job cuts) and invested in upgrading customer service. The carrier continues to be one of the US leaders for on-time performance, an aspect of the business that customers care deeply about.
A strong organisation is not optional, something to worry about after the crisis. Your organisation’s strength will greatly affect how well your company weathers the storm.
It will also strongly improve your chances for growth once the storm passes.
by Simeon Preston is a partner with Bain & Company and a leader in the firm’s Southeast Asia Organisation practice. Marcia Blenko is a partner and leads Bain’s Global Organisation practice. Adapted from the forthcoming book, Winning in Turbulence, by Bain & Company, published by Harvard Business Press.
Business Continuity: Planning for a disaster vital for business survival
These are disruptive times. Natural disasters, wars, terrorism and computer viruses aside, we also face a global financial crisis and the influenza virus A (H1N1) pandemic.
In such a discontinuous and disruptive environment, business contingency or continuity planning and management (BCPM) is essential for organisational survival, resilience and sustainability. Hence, there has been much effort to improve BCPM in recent years, particularly in mission-critical businesses, such as telecommunications, financial institutions and airlines.
The goal is to foresee and improve the management of major incidents and crises. BCPM can be considered a strategic framework that encompasses tactics to mitigate risks or incidents that might cause asset or financial losses, customer service failures, business process failures and damage to brand or reputation.
What is BCPM?
According to the Business Continuity Institute in the UK, business continuity management (BCM) is a holistic process that identifies potential threats to an organisation and provides a framework for building resilience with the capability for an effective response that safeguards the interests of its key stakeholders, reputation, brand and value-creating activities.
Business continuity planning (BCP), on the other hand, refers to the preparations needed to identify the impact of a potential loss, formulating and implementing viable recovery strategies, developing plan(s) that ensure continuity of services; and delivering a comprehensive training, testing and maintenance programme.
In plain language, BCPM is working out how to stay in business in the event of a disaster.
BCPM involves four stages:
1) Prevention, which requires a risk management plan identifying and managing the likelihood and/or effects of risk associated with an incident;
2) Preparedness, which comprises a business impact analysis that identifies and prioritises the key activities of a business that may be adversely affected by any disruption;
3) Response, which calls for a plan outlining immediate actions in terms of containment, control and minimising impact; and
4) Recovery, which involves an outline of actions to be taken to minimise disruption and recovery time.
According to META Group research, 80% of the Global 2000 organisations have some form of disaster recovery or business continuity plan, but only 60% of these plans are reasonably complete and actionable, that is, they adequately address coverage of resources and can be successfully executed.
A Gartner Research report titled “What is Crisis Management?” had similar findings. Gartner said 85% of the Global 2000 enterprises had established a disaster recovery plan for core technology and infrastructure, but only 15% had a full-fledged business continuity plan.
In Malaysia, according to a study by PricewaterhouseCoopers, BCP is not widely implemented across all sectors of industries, including airline and aerodrome operators, multinational oil and gas corporations, telecommunications and financial services.
Perhaps it is time for senior management to confront and demand honest answers to a vital question: Is the organisation prepared to withstand a major disruption? Each of the possible causes of disruption must be assessed, including the relative probability of each cause and the damage it could wrought.
To protect the organisation, management must allocate adequate funds to the creation, review, testing and upgrading of continuity plans.
Here are some insights for organisations keen to implement BCPM:
Management insight #1: Expect the unexpected, think the unthinkable
History has shown that the unexpected and unthinkable can and have happened. Hence, we should foresee unexpected and unthinkable events. This will make you more alert and prepared should they materialise.
Management insight #2: Identify mission-critical functions, organise assets
It is essential for the organisation to identify its mission-critical functions and activities, as well as organise and safeguard its assets, both tangible and intangible. Critical functions need a sound contingency and recovery plan. In the event of a disaster, available resources should be directed towards ensuring that these operations get back up quickly and that the most valuable assets are protected.
Management insight #3: Perform risk analysis
All potential risks, along with their impact on the business, need to be analysed. There must be a mitigation strategy that identifies potential threats and puts appropriate controls in place to reduce vulnerabilities. The organisation needs to define the “acceptable risk” it is prepared to take.
Management insight #4: Prepare emergency response mechanism
There must be a detailed operational plan and procedures in place to respond to emergencies or catastrophes. Responsibilities, resources and processes must be defined in your BCPM. Pre- and post-disaster activities must be clearly identified and addressed.
Management insight #5: Communicate and review
The BCP has to be shared with all the stakeholders, including employees and partners, to be effective. There must also be periodic reviews and rehearsals to align the BCP and management strategies with changing business needs and objectives.
In today’s era of business discontinuity and disruptions, it is much better to practise proactive than reactive management. The volatile environment provides great challenges and opportunities for management leaders and business continuity practitioners. We should always “plan for the worst and manage for the best”.
Dr Wilson Tay, MMIM, MIM-CPT, is CEO of the Malaysian Institute of Management
In such a discontinuous and disruptive environment, business contingency or continuity planning and management (BCPM) is essential for organisational survival, resilience and sustainability. Hence, there has been much effort to improve BCPM in recent years, particularly in mission-critical businesses, such as telecommunications, financial institutions and airlines.
The goal is to foresee and improve the management of major incidents and crises. BCPM can be considered a strategic framework that encompasses tactics to mitigate risks or incidents that might cause asset or financial losses, customer service failures, business process failures and damage to brand or reputation.
What is BCPM?
According to the Business Continuity Institute in the UK, business continuity management (BCM) is a holistic process that identifies potential threats to an organisation and provides a framework for building resilience with the capability for an effective response that safeguards the interests of its key stakeholders, reputation, brand and value-creating activities.
Business continuity planning (BCP), on the other hand, refers to the preparations needed to identify the impact of a potential loss, formulating and implementing viable recovery strategies, developing plan(s) that ensure continuity of services; and delivering a comprehensive training, testing and maintenance programme.
In plain language, BCPM is working out how to stay in business in the event of a disaster.
BCPM involves four stages:
1) Prevention, which requires a risk management plan identifying and managing the likelihood and/or effects of risk associated with an incident;
2) Preparedness, which comprises a business impact analysis that identifies and prioritises the key activities of a business that may be adversely affected by any disruption;
3) Response, which calls for a plan outlining immediate actions in terms of containment, control and minimising impact; and
4) Recovery, which involves an outline of actions to be taken to minimise disruption and recovery time.
According to META Group research, 80% of the Global 2000 organisations have some form of disaster recovery or business continuity plan, but only 60% of these plans are reasonably complete and actionable, that is, they adequately address coverage of resources and can be successfully executed.
A Gartner Research report titled “What is Crisis Management?” had similar findings. Gartner said 85% of the Global 2000 enterprises had established a disaster recovery plan for core technology and infrastructure, but only 15% had a full-fledged business continuity plan.
In Malaysia, according to a study by PricewaterhouseCoopers, BCP is not widely implemented across all sectors of industries, including airline and aerodrome operators, multinational oil and gas corporations, telecommunications and financial services.
Perhaps it is time for senior management to confront and demand honest answers to a vital question: Is the organisation prepared to withstand a major disruption? Each of the possible causes of disruption must be assessed, including the relative probability of each cause and the damage it could wrought.
To protect the organisation, management must allocate adequate funds to the creation, review, testing and upgrading of continuity plans.
Here are some insights for organisations keen to implement BCPM:
Management insight #1: Expect the unexpected, think the unthinkable
History has shown that the unexpected and unthinkable can and have happened. Hence, we should foresee unexpected and unthinkable events. This will make you more alert and prepared should they materialise.
Management insight #2: Identify mission-critical functions, organise assets
It is essential for the organisation to identify its mission-critical functions and activities, as well as organise and safeguard its assets, both tangible and intangible. Critical functions need a sound contingency and recovery plan. In the event of a disaster, available resources should be directed towards ensuring that these operations get back up quickly and that the most valuable assets are protected.
Management insight #3: Perform risk analysis
All potential risks, along with their impact on the business, need to be analysed. There must be a mitigation strategy that identifies potential threats and puts appropriate controls in place to reduce vulnerabilities. The organisation needs to define the “acceptable risk” it is prepared to take.
Management insight #4: Prepare emergency response mechanism
There must be a detailed operational plan and procedures in place to respond to emergencies or catastrophes. Responsibilities, resources and processes must be defined in your BCPM. Pre- and post-disaster activities must be clearly identified and addressed.
Management insight #5: Communicate and review
The BCP has to be shared with all the stakeholders, including employees and partners, to be effective. There must also be periodic reviews and rehearsals to align the BCP and management strategies with changing business needs and objectives.
In today’s era of business discontinuity and disruptions, it is much better to practise proactive than reactive management. The volatile environment provides great challenges and opportunities for management leaders and business continuity practitioners. We should always “plan for the worst and manage for the best”.
Dr Wilson Tay, MMIM, MIM-CPT, is CEO of the Malaysian Institute of Management
Balancing act — managing baby boomers, Gen X and Y
It’s no secret that baby boomers, Generation X and Y, have different perceptions of work and life. So it comes as no surprise that all three generations also view the current economic crisis differently.
According to Accenture talent and organisation performance director Low Choy Huat, baby boomers (those born between 1946 and 1964) are naturally worried about job security in this downturn since they are nearer to retirement age. However, they would try and leverage their experiences of previous economic crises to weather the current one.
Gen X-ers (those born between 1965 and 1977) would also be concerned with job security as they have young families to raise and elderly parents to take care of, Low said. But due to their belief that they are future leaders, they see the current situation as a learning experience and position themselves for a recovery in the economy.
Gen Y-ers (those born between 1978 and 1997), currently the youngest in the workforce, would continue to look for opportunities while being less choosy.
With such differing attitudes among their staff, managers need to effectively manage all three generations to focus on a common goal — how to weather the economic storm.
“This is a golden opportunity for managers to step up as leaders making a difference in tough times. For example, in the oil and gas industry where the generation gap in the technical workforce is wide, many players in Malaysia continue to invest in capability-building so that effective and efficient practices/knowledge are documented and shared despite tough times,” Low said in a recent email interview.
“One of the challenges is motivating senior engineers to impart their years of accumulated experience to young engineers in a very open and transparent manner. This is not easy as it changes the fundamental way of driving speed to competency, that is, how long it takes to be competent in a job or task, and value creation like never before,” he added.
Having good people management skills is critical in managing a multi-generational workforce, said Low. Listening, empathising, team-building, providing constructive performance feedback and effective two-way communication skills go a long way to help drive more collaboration across the three generations.
In this respect, knowing the type of communication preferred by each generation would help. “Baby boomers tend to like more face-to-face meetings, whereas a Gen Y can’t wait to ‘ping’ a friend to get quick results,” he said.
“Managers should be versatile when interacting with the different generations. The boss who understands that a Gen Y worker appreciates direct and immediate feedback should not wait till the annual performance appraisal cycle at the end of the year to provide feedback. It might be too late.”
Technology also plays a significant role in managing across generations, says Low. Through interaction and collaborative environments, different generations can overcome their prejudices and work towards a common goal.
“The common goal could be knowing common friends ‘online’ or even a technology gadget where common conversations can happen more freely. For example, a baby boomer or Gen X manager could join the Gen Y virtual communities by getting into Facebook or even registering for an instant messenger account,” he explained.
“This way, the generation gaps can be reduced. Many companies have started to use Facebook, a social networking tool, for recruitment purposes through leveraging technology to bring the different generations closer together.”
Many high-performing companies have adapted their workforce-learning strategies and technologies based on their understanding of each generation.
“Training sessions are becoming more dynamic and bite-sized, that is, a 30-minute webcast on how to execute a task, rather than a three-hour computer-based training or a three-day workshop to teach the A to Z’s of a subject,” Low elaborated.
A company’s organisational culture also plays an important role in bringing the three generations together, he said. “A company with a more open, diverse, tech-savvy and global culture will likely be more successful in managing the different generations. The ‘common language’ that unifies a company will likely act as a glue to promote more awareness of work styles and generation demands.”
Some companies provide multi-generational workforce training to employees to enhance their understanding so as to build a more cohesive culture, which in turn supports the company’s core values, Low said.
Others even build their HR policies around the different workforce generations. Low said a 2007 article on US work website CareerBuilder.com, “Generation Y: Too demanding at work?”, showed that 15% of employers modified their policies based on the different generations. Among those employers who made changes, 57% implemented more flexible work schedules and 33% created new recognition programmes.
According to Accenture talent and organisation performance director Low Choy Huat, baby boomers (those born between 1946 and 1964) are naturally worried about job security in this downturn since they are nearer to retirement age. However, they would try and leverage their experiences of previous economic crises to weather the current one.
Gen X-ers (those born between 1965 and 1977) would also be concerned with job security as they have young families to raise and elderly parents to take care of, Low said. But due to their belief that they are future leaders, they see the current situation as a learning experience and position themselves for a recovery in the economy.
Gen Y-ers (those born between 1978 and 1997), currently the youngest in the workforce, would continue to look for opportunities while being less choosy.
With such differing attitudes among their staff, managers need to effectively manage all three generations to focus on a common goal — how to weather the economic storm.
“This is a golden opportunity for managers to step up as leaders making a difference in tough times. For example, in the oil and gas industry where the generation gap in the technical workforce is wide, many players in Malaysia continue to invest in capability-building so that effective and efficient practices/knowledge are documented and shared despite tough times,” Low said in a recent email interview.
“One of the challenges is motivating senior engineers to impart their years of accumulated experience to young engineers in a very open and transparent manner. This is not easy as it changes the fundamental way of driving speed to competency, that is, how long it takes to be competent in a job or task, and value creation like never before,” he added.
Having good people management skills is critical in managing a multi-generational workforce, said Low. Listening, empathising, team-building, providing constructive performance feedback and effective two-way communication skills go a long way to help drive more collaboration across the three generations.
In this respect, knowing the type of communication preferred by each generation would help. “Baby boomers tend to like more face-to-face meetings, whereas a Gen Y can’t wait to ‘ping’ a friend to get quick results,” he said.
“Managers should be versatile when interacting with the different generations. The boss who understands that a Gen Y worker appreciates direct and immediate feedback should not wait till the annual performance appraisal cycle at the end of the year to provide feedback. It might be too late.”
Technology also plays a significant role in managing across generations, says Low. Through interaction and collaborative environments, different generations can overcome their prejudices and work towards a common goal.
“The common goal could be knowing common friends ‘online’ or even a technology gadget where common conversations can happen more freely. For example, a baby boomer or Gen X manager could join the Gen Y virtual communities by getting into Facebook or even registering for an instant messenger account,” he explained.
“This way, the generation gaps can be reduced. Many companies have started to use Facebook, a social networking tool, for recruitment purposes through leveraging technology to bring the different generations closer together.”
Many high-performing companies have adapted their workforce-learning strategies and technologies based on their understanding of each generation.
“Training sessions are becoming more dynamic and bite-sized, that is, a 30-minute webcast on how to execute a task, rather than a three-hour computer-based training or a three-day workshop to teach the A to Z’s of a subject,” Low elaborated.
A company’s organisational culture also plays an important role in bringing the three generations together, he said. “A company with a more open, diverse, tech-savvy and global culture will likely be more successful in managing the different generations. The ‘common language’ that unifies a company will likely act as a glue to promote more awareness of work styles and generation demands.”
Some companies provide multi-generational workforce training to employees to enhance their understanding so as to build a more cohesive culture, which in turn supports the company’s core values, Low said.
Others even build their HR policies around the different workforce generations. Low said a 2007 article on US work website CareerBuilder.com, “Generation Y: Too demanding at work?”, showed that 15% of employers modified their policies based on the different generations. Among those employers who made changes, 57% implemented more flexible work schedules and 33% created new recognition programmes.
Managers not getting enough sleep, says study
Feeling cranky in the mornings? Perhaps you’re being kept awake at night by the state of the world’s economy. If so, you’re not alone. A survey has shown that the average manager sleeps 19% less than the recommended eight hours a night, and of those surveyed, 40% blame the economic crisis for their lack of sleep.
The recent study by Royal Philips Electronics surveyed 2,500 managers in the UK, Germany, the US, Japan and the Netherlands on their sleep habits and the impact of sleep on health and quality of life. The online poll was conducted in March.
Sixty-one per cent of respondents said lack of sleep had negatively impacted their work. Fifty-eight per cent reported being less able to concentrate; 51% said they had less patience; 49% had less enthusiasm; and 25% said it impaired their judgement.
Sleepless in Seattle (and elsewhere in the US): American managers are more likely than others to lose sleep through work stress
It’s not just work that suffers — 34% of respondents said lack of sleep negatively affected their family relationships; 25% said it affected sexual relationships; and 19% said it affected friendships.
On average, each respondent estimated 6.2 days per year were impacted by inadequate sleep — costing companies around the globe millions. In the UK, 6.7 days per year are affected by lack of sleep, causing companies to lose nearly £850 (RM4,607) in productivity per manager per year. The study estimated that with 4.3 million managers in the UK, the cost to the economy could be as high as £3.63 billion a year.
The US economy is taking a toll on managers there. The study found that American managers are more likely than other nationalities to lose sleep through stress at work, with 30% citing it as the reason they wake up at night. They are closely followed by Germans (27%), Britons (24%), and Japanese (20%).
Another reason why Americans are having trouble falling asleep — taking up to 26 minutes to nod off — is that their men lead the world in snoring, with 29% snoring every night.
However, Japan, where economic growth has shrunk for the last four quarters, has the most number of sleep-deprived managers, with 97% sleeping less than eight hours a night. While 20% of managers surveyed admit to work-related stress keeping them awake, other causes for their insomnia remain a mystery — none of them ever discuss their sleep patterns with managers or colleagues, compared with the global average of 30%.
“People lose sleep either because they cannot sleep (insomnia) or because they are not setting aside enough time for sleep — both of which can happen because of work-related stress in the current economic environment,” says Dr David White, chief medical officer for Philips Home Healthcare Solutions. Philips is a leader in the sleep management market and the treatment of Obstructive Sleep Apnea.
“People need to take sleep more seriously,” adds White in a May 18 press release about the report.
Most managers are fully aware of the negative effects brought about by sleep deprivation, says the report. Almost all (96%) recognise that inadequate sleep can seriously affect a person’s health. But only 27% seek professional help — the rest talk about their problems with family and friends.
“Sleep is not optional — it is absolutely critical to people’s health,” says White. “The consequences of not sleeping enough are well documented. People who do not get enough sleep can gain weight, are prone to diabetes, high blood pressure and even heart attacks.”
So which country’s managers get a good night’s rest? The Dutch, who manage six hours and 38 minutes on average, are sleeping 24 minutes longer than any other nation surveyed. They are also largely unaffected by the worsening economic climate, with 85% saying it was not a problem, and virtually none of them are losing sleep over world events or money worries.
The recent study by Royal Philips Electronics surveyed 2,500 managers in the UK, Germany, the US, Japan and the Netherlands on their sleep habits and the impact of sleep on health and quality of life. The online poll was conducted in March.
Sixty-one per cent of respondents said lack of sleep had negatively impacted their work. Fifty-eight per cent reported being less able to concentrate; 51% said they had less patience; 49% had less enthusiasm; and 25% said it impaired their judgement.
Sleepless in Seattle (and elsewhere in the US): American managers are more likely than others to lose sleep through work stress
It’s not just work that suffers — 34% of respondents said lack of sleep negatively affected their family relationships; 25% said it affected sexual relationships; and 19% said it affected friendships.
On average, each respondent estimated 6.2 days per year were impacted by inadequate sleep — costing companies around the globe millions. In the UK, 6.7 days per year are affected by lack of sleep, causing companies to lose nearly £850 (RM4,607) in productivity per manager per year. The study estimated that with 4.3 million managers in the UK, the cost to the economy could be as high as £3.63 billion a year.
The US economy is taking a toll on managers there. The study found that American managers are more likely than other nationalities to lose sleep through stress at work, with 30% citing it as the reason they wake up at night. They are closely followed by Germans (27%), Britons (24%), and Japanese (20%).
Another reason why Americans are having trouble falling asleep — taking up to 26 minutes to nod off — is that their men lead the world in snoring, with 29% snoring every night.
However, Japan, where economic growth has shrunk for the last four quarters, has the most number of sleep-deprived managers, with 97% sleeping less than eight hours a night. While 20% of managers surveyed admit to work-related stress keeping them awake, other causes for their insomnia remain a mystery — none of them ever discuss their sleep patterns with managers or colleagues, compared with the global average of 30%.
“People lose sleep either because they cannot sleep (insomnia) or because they are not setting aside enough time for sleep — both of which can happen because of work-related stress in the current economic environment,” says Dr David White, chief medical officer for Philips Home Healthcare Solutions. Philips is a leader in the sleep management market and the treatment of Obstructive Sleep Apnea.
“People need to take sleep more seriously,” adds White in a May 18 press release about the report.
Most managers are fully aware of the negative effects brought about by sleep deprivation, says the report. Almost all (96%) recognise that inadequate sleep can seriously affect a person’s health. But only 27% seek professional help — the rest talk about their problems with family and friends.
“Sleep is not optional — it is absolutely critical to people’s health,” says White. “The consequences of not sleeping enough are well documented. People who do not get enough sleep can gain weight, are prone to diabetes, high blood pressure and even heart attacks.”
So which country’s managers get a good night’s rest? The Dutch, who manage six hours and 38 minutes on average, are sleeping 24 minutes longer than any other nation surveyed. They are also largely unaffected by the worsening economic climate, with 85% saying it was not a problem, and virtually none of them are losing sleep over world events or money worries.
When complexity hurts businesses
Downturns reveal a company’s weaknesses. An organisation that seemed nimble and focused during a period of expansion may be sluggish and ineffectual when demand drops off. Survival can depend on quickly determining which products are making money, what customers really value, and where organisational bottlenecks are.
One major cause for this sluggishness is complexity — product complexity, organisational complexity, and process complexity. The costs of complexity are usually hidden, so executives often don’t grasp the magnitude of the problem until a downturn hits and the business feels dangerously close to stalling.
The challenge is that some complexity is advantageous, even in a downturn. For example, country or regional business units are closer to the ground than headquarters and are more likely to know what customers want. It takes a complex organisation to provide enough local autonomy so products or services can be tailored to those customers while still taking advantage of global scale. But that kind of complexity can be vital to sustain sales through a recession.
A similar challenge arises when companies struggle to balance complexity and innovation. Adding new products, services, features and options creates complexity of all sorts. But companies become leaders by offering customers new choices, and in a downturn, innovation may be a company’s salvation.
The key is not to eliminate complexity but to balance its benefits with its costs.
A useful way of analysing the level of complexity in your company — and separating complexity that’s beneficial from complexity that hurts the business — is to begin from a base of zero.
Imagine, for example, that your company produced just one product or service with no variations, sort of like Henry Ford’s classic Model T. A manufacturer with only one product would still need a supply chain, a factory, a distribution network, and a sales-and-marketing function. But it could greatly simplify its IT systems, distribution and sales efforts, and forecasting.
One plant manager with whom we discussed this exercise was flying in 15 planes’ worth of parts almost every day to meet the next day’s production schedule. In a Model T environment, he noted, “all those costs would disappear instantaneously”.
The point of the exercise, of course, isn’t to return to the days of the Model T, but to determine your zero-complexity costs, and then assess the costs of adding variety back in. Often the cost curve has a “knee”, a step change triggered by adding one more model or level of variety, and you can determine whether moving beyond the knee is worth the additional expense. You can also assess the benefits of innovation, and determine the focal point where a given innovation overshoots what most customers want and are willing to pay for.
For example, you might decide to eliminate individual options and instead offer customers a small number of configurations that include the most popular features. Thus, Honda’s CRV comes in just eight configurations and 13 interior/exterior colour combinations, for a total of 104 possible build combinations. This presents far fewer choices than most cars offer, yet the CRV is the hottest-selling vehicle in its class.
Similar kinds of analyses can diagnose organisational and process complexity.
We’ve found that companies get the best results by attacking product complexity first and organisational complexity next, and only then focusing on process complexity.
The reason is this: Complex processes often reflect unnecessary product variety or poor organisational design. If you attempt to simplify a process without changing product or organisational complexity, you find even more complexity cropping up in some other process area, like pushing on one side of a balloon only to find it bulging out on the other side.
Unfortunately, most companies that do attempt to manage complexity usually begin with processes, often through efforts such as Lean Six Sigma. Typically, the emphasis is on how companies can execute all their current operations faster and with fewer resources. But that’s actually the wrong place to start.
Reducing process complexity should be a company’s last step, and it involves looking for the process improvements that add the most value and by eliminating unnecessary data collection.
One of the world’s largest natural resources companies, for example, found that it had no fewer than 483 process improvement projects in the works, and that only 25 would deliver a significant impact. In tandem with product and organisational simplifications, the company was able to boost operating income by more than 20%. Meanwhile, the same company found it could reduce its volume of reports by 40% in one major business unit.
All these complexity management efforts help a company become lean and flexible enough to adjust to the changing market conditions in a downturn. It pays off again when the economy improves and a company has stripped out enough complexity to accelerate quickly out of the downturn
One major cause for this sluggishness is complexity — product complexity, organisational complexity, and process complexity. The costs of complexity are usually hidden, so executives often don’t grasp the magnitude of the problem until a downturn hits and the business feels dangerously close to stalling.
The challenge is that some complexity is advantageous, even in a downturn. For example, country or regional business units are closer to the ground than headquarters and are more likely to know what customers want. It takes a complex organisation to provide enough local autonomy so products or services can be tailored to those customers while still taking advantage of global scale. But that kind of complexity can be vital to sustain sales through a recession.
A similar challenge arises when companies struggle to balance complexity and innovation. Adding new products, services, features and options creates complexity of all sorts. But companies become leaders by offering customers new choices, and in a downturn, innovation may be a company’s salvation.
The key is not to eliminate complexity but to balance its benefits with its costs.
A useful way of analysing the level of complexity in your company — and separating complexity that’s beneficial from complexity that hurts the business — is to begin from a base of zero.
Imagine, for example, that your company produced just one product or service with no variations, sort of like Henry Ford’s classic Model T. A manufacturer with only one product would still need a supply chain, a factory, a distribution network, and a sales-and-marketing function. But it could greatly simplify its IT systems, distribution and sales efforts, and forecasting.
One plant manager with whom we discussed this exercise was flying in 15 planes’ worth of parts almost every day to meet the next day’s production schedule. In a Model T environment, he noted, “all those costs would disappear instantaneously”.
The point of the exercise, of course, isn’t to return to the days of the Model T, but to determine your zero-complexity costs, and then assess the costs of adding variety back in. Often the cost curve has a “knee”, a step change triggered by adding one more model or level of variety, and you can determine whether moving beyond the knee is worth the additional expense. You can also assess the benefits of innovation, and determine the focal point where a given innovation overshoots what most customers want and are willing to pay for.
For example, you might decide to eliminate individual options and instead offer customers a small number of configurations that include the most popular features. Thus, Honda’s CRV comes in just eight configurations and 13 interior/exterior colour combinations, for a total of 104 possible build combinations. This presents far fewer choices than most cars offer, yet the CRV is the hottest-selling vehicle in its class.
Similar kinds of analyses can diagnose organisational and process complexity.
We’ve found that companies get the best results by attacking product complexity first and organisational complexity next, and only then focusing on process complexity.
The reason is this: Complex processes often reflect unnecessary product variety or poor organisational design. If you attempt to simplify a process without changing product or organisational complexity, you find even more complexity cropping up in some other process area, like pushing on one side of a balloon only to find it bulging out on the other side.
Unfortunately, most companies that do attempt to manage complexity usually begin with processes, often through efforts such as Lean Six Sigma. Typically, the emphasis is on how companies can execute all their current operations faster and with fewer resources. But that’s actually the wrong place to start.
Reducing process complexity should be a company’s last step, and it involves looking for the process improvements that add the most value and by eliminating unnecessary data collection.
One of the world’s largest natural resources companies, for example, found that it had no fewer than 483 process improvement projects in the works, and that only 25 would deliver a significant impact. In tandem with product and organisational simplifications, the company was able to boost operating income by more than 20%. Meanwhile, the same company found it could reduce its volume of reports by 40% in one major business unit.
All these complexity management efforts help a company become lean and flexible enough to adjust to the changing market conditions in a downturn. It pays off again when the economy improves and a company has stripped out enough complexity to accelerate quickly out of the downturn
How to win through productivity in an unsure economy
This much, at least, is clear: The global economy is wavering. A predicted US recession and widespread inflation spell possible trouble worldwide.
However, any agreement among top economists stops right there. Divided expert opinion sees today's situation as anything from a blip on the screen to the beginning of a doomsday scenario.
So, what's the smart HR response? Preparing for a long-term recession could mean eroding the talent investments, mechanisms and networks the company has worked hard to put in place. Then again, sitting tight and crossing one's fingers clearly isn't prudent.
The answer for most companies rests somewhere in between: Prepare for a short-term downturn while focusing on the larger emerging issues — a multiyear battle against wage and commodity inflation. The critical solution is productivity.
Don't panic — you'll destroy capability
It has been widely predicted that the US is heading into recession, if it is not already in one. However, Asia- Pacific is expected to continue being the engine of growth for the world economy. More recent data suggests that emerging markets in Asia-Pacific are forecast to grow in 2009, albeit at a slower rate.
We see companies across many industries bracing themselves — and yet, so far, most are just waiting and watching. The labour market remains tight, especially for skilled professionals, with no decrease in attrition.
The message for HR executives: Take no dramatic action. Responding to predictions of a "gloom and doom" scenario means dismantling the structure and systems you've spent many years and a great deal of money establishing. We believe an overzealous response would be a mistake for three reasons:
First, after rounds of dramatic layoffs and reorganisations during previous economic downturns, most global companies today are leaner than ever. There is virtually nothing — and no one — left to cut without serious organisational impact.
Second, letting go of the careful hires your company has worked diligently to engage would mean the write-off of a substantial multi -year effort in recruiting and retention. As witnessed during previous cycles, employees have excellent memories. During better times, they remember the actions their companies took back when the going got tough.
Finally, when business turns around, you'll need the talent capabilities you've built more than ever. Casting off your talent investments could leave your organisation crippled in the face of a rapid rebound.
At the same time, we recommend three steps companies should be taking to prepare:
- Don't over-employ. While we don't necessarily advocate broad-scale layoffs, we do suggest being more careful (and taking more time) in the hiring process. All new hires should be subject to a disciplined review of their business cases, taking into account current economic conditions.
- Review your severance policy and plans. Understand the true costs of separating with employees, and develop a staff reduction plan for use if conditions worsen.
- Most important, begin to view everything you do through the lens of productivity. The concept of productivity is hardly new, but we believe it represents the best hedge against economic downturns and inflation.
Productivity protects against recession and inflation
In the 1970s, Japanese-style "lean" manufacturing drove productivity gains. In the 1980s, access to capital encouraged expansion. In the 1990s, the technology boom spurred productivity and growth. Today, we see the type of productivity driven by human capital as the success factor most likely to lead companies out of the economic trouble ahead.
What does an emphasis on productivity mean beyond business as usual at most companies? For HR professionals, it means taking a business analytics perspective towards human capital and relating business drivers to productivity. Getting back to basics, remembering what your economic model is and then making sure your employees are specifically set up to support that model will be critical. If your employees are not driving metrics related to your business strategy on a daily basis, something needs to change.
To that end, Watson Wyatt's WorkUSA® 2006/2007 study found that companies with high levels of employee engagement and line of sight boast significantly higher financial returns than those with low levels. In short, the most engaged employees are far more productive, make better use of assets, work more effectively and deliver higher returns to shareholders than other workers:
The average productivity per employee for companies with high employee engagement is US$276,000 (RM993,000), compared with US$236,000 for those with low engagement. For a Standard & Poor's 500 Index company with 20,000 employees, this difference could translate to US$800 million in annual revenues.
Companies with highly engaged employees reported a five-year total return to shareholders (TRS) of 20%; those with low engagement reported no shareholder returns over a five-year period.
Companies with highly engaged employees also reported a market premium of 22%, compared with 14% for those with low engagement.
HR can help boost long-term productivity
Your company's HR team has the opportunity to play a critical role in helping the organisation avoid the pitfalls of this potentially threatening economy. You can boost the productivity of every employee in the company and hedge against the core economic concerns of the future that focus on inflation.
Organisations that react to the current economic environment by being proactive and productivity-focused, as opposed to being reactive and cost-focused, stand the greatest chance of emerging successful.
How to drive talent productivity
In today's economic environment, companies have a strong incentive for driving talent productivity. Successful organisations are taking the following steps to improve employee productivity and the company's financial strength:
- Develop specific performance metrics for the organisation that are tied to key business outcomes. Use an analytical process focusing on core business fundamentals to determine which measures of performance are best suited to drive the organisation in the right direction.
- Integrate these metrics into the company's performance management system. Cascade measures throughout the organisation to ensure alignment among overall company, unit and individual productivity goals.
- Create a talent management programme focused on acquiring, enhancing and deploying the key skills required to achieve the various sets of business and operational goals. Ensure the organisation has the right people in the right roles at the right time to be successful.
- Modify reward programmes for executives and the broader employee population to reinforce goals and provide strong differentiation between high performers and lower performers. Use the entire gamut of reward vehicles (for examples, base salary, annual incentives and long-term incentives) to create a portfolio of tools that management can use to drive and sustain company performance.
- Drill down into mission-critical, customer-facing and operational units to maximise individual and team productivity. Recognise that the most significant opportunities typically occur in sales, customer service, research and development, operations and manufacturing.
Focus on the productivity of the HR team itself, creating opportunities to continuously improve. Develop meaningful metrics for HR tied to organisational productivity and talent effectiveness
Written by John M Bremen, Paul Platten and Vivek Nath
However, any agreement among top economists stops right there. Divided expert opinion sees today's situation as anything from a blip on the screen to the beginning of a doomsday scenario.
So, what's the smart HR response? Preparing for a long-term recession could mean eroding the talent investments, mechanisms and networks the company has worked hard to put in place. Then again, sitting tight and crossing one's fingers clearly isn't prudent.
The answer for most companies rests somewhere in between: Prepare for a short-term downturn while focusing on the larger emerging issues — a multiyear battle against wage and commodity inflation. The critical solution is productivity.
Don't panic — you'll destroy capability
It has been widely predicted that the US is heading into recession, if it is not already in one. However, Asia- Pacific is expected to continue being the engine of growth for the world economy. More recent data suggests that emerging markets in Asia-Pacific are forecast to grow in 2009, albeit at a slower rate.
We see companies across many industries bracing themselves — and yet, so far, most are just waiting and watching. The labour market remains tight, especially for skilled professionals, with no decrease in attrition.
The message for HR executives: Take no dramatic action. Responding to predictions of a "gloom and doom" scenario means dismantling the structure and systems you've spent many years and a great deal of money establishing. We believe an overzealous response would be a mistake for three reasons:
First, after rounds of dramatic layoffs and reorganisations during previous economic downturns, most global companies today are leaner than ever. There is virtually nothing — and no one — left to cut without serious organisational impact.
Second, letting go of the careful hires your company has worked diligently to engage would mean the write-off of a substantial multi -year effort in recruiting and retention. As witnessed during previous cycles, employees have excellent memories. During better times, they remember the actions their companies took back when the going got tough.
Finally, when business turns around, you'll need the talent capabilities you've built more than ever. Casting off your talent investments could leave your organisation crippled in the face of a rapid rebound.
At the same time, we recommend three steps companies should be taking to prepare:
- Don't over-employ. While we don't necessarily advocate broad-scale layoffs, we do suggest being more careful (and taking more time) in the hiring process. All new hires should be subject to a disciplined review of their business cases, taking into account current economic conditions.
- Review your severance policy and plans. Understand the true costs of separating with employees, and develop a staff reduction plan for use if conditions worsen.
- Most important, begin to view everything you do through the lens of productivity. The concept of productivity is hardly new, but we believe it represents the best hedge against economic downturns and inflation.
Productivity protects against recession and inflation
In the 1970s, Japanese-style "lean" manufacturing drove productivity gains. In the 1980s, access to capital encouraged expansion. In the 1990s, the technology boom spurred productivity and growth. Today, we see the type of productivity driven by human capital as the success factor most likely to lead companies out of the economic trouble ahead.
What does an emphasis on productivity mean beyond business as usual at most companies? For HR professionals, it means taking a business analytics perspective towards human capital and relating business drivers to productivity. Getting back to basics, remembering what your economic model is and then making sure your employees are specifically set up to support that model will be critical. If your employees are not driving metrics related to your business strategy on a daily basis, something needs to change.
To that end, Watson Wyatt's WorkUSA® 2006/2007 study found that companies with high levels of employee engagement and line of sight boast significantly higher financial returns than those with low levels. In short, the most engaged employees are far more productive, make better use of assets, work more effectively and deliver higher returns to shareholders than other workers:
The average productivity per employee for companies with high employee engagement is US$276,000 (RM993,000), compared with US$236,000 for those with low engagement. For a Standard & Poor's 500 Index company with 20,000 employees, this difference could translate to US$800 million in annual revenues.
Companies with highly engaged employees reported a five-year total return to shareholders (TRS) of 20%; those with low engagement reported no shareholder returns over a five-year period.
Companies with highly engaged employees also reported a market premium of 22%, compared with 14% for those with low engagement.
HR can help boost long-term productivity
Your company's HR team has the opportunity to play a critical role in helping the organisation avoid the pitfalls of this potentially threatening economy. You can boost the productivity of every employee in the company and hedge against the core economic concerns of the future that focus on inflation.
Organisations that react to the current economic environment by being proactive and productivity-focused, as opposed to being reactive and cost-focused, stand the greatest chance of emerging successful.
How to drive talent productivity
In today's economic environment, companies have a strong incentive for driving talent productivity. Successful organisations are taking the following steps to improve employee productivity and the company's financial strength:
- Develop specific performance metrics for the organisation that are tied to key business outcomes. Use an analytical process focusing on core business fundamentals to determine which measures of performance are best suited to drive the organisation in the right direction.
- Integrate these metrics into the company's performance management system. Cascade measures throughout the organisation to ensure alignment among overall company, unit and individual productivity goals.
- Create a talent management programme focused on acquiring, enhancing and deploying the key skills required to achieve the various sets of business and operational goals. Ensure the organisation has the right people in the right roles at the right time to be successful.
- Modify reward programmes for executives and the broader employee population to reinforce goals and provide strong differentiation between high performers and lower performers. Use the entire gamut of reward vehicles (for examples, base salary, annual incentives and long-term incentives) to create a portfolio of tools that management can use to drive and sustain company performance.
- Drill down into mission-critical, customer-facing and operational units to maximise individual and team productivity. Recognise that the most significant opportunities typically occur in sales, customer service, research and development, operations and manufacturing.
Focus on the productivity of the HR team itself, creating opportunities to continuously improve. Develop meaningful metrics for HR tied to organisational productivity and talent effectiveness
Written by John M Bremen, Paul Platten and Vivek Nath
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