The market contracts. Gone are the years of bonanza and growth that endured everything, even poor business management practices…
One of the most obvious and painful consequences is unemployment, which experts predict will approach 20% by the end of 2009. It is the adaptation of companies to their new reality, which is leading to massive restructuring and resizing processes.
Behind these accelerated rates of job destruction (higher than the European average) hides, among others, one of the greatest evils of our companies: a low level of productivity that places us at the bottom of Europe, and ends up translating in losing jobs in difficult times.
The growth of these almost 15 years of both traditional activities and new businesses in which everyone has gotten into, sometimes with little background, has given rise to uncontrolled personnel hiring processes. These have been carried out, in many cases, to the detriment of greater and better investments in tools and technology, or of optimization and continuous improvement of processes, as well as in automations, which allow to improve productivity. In the absence of creativity, or of experience in implementing good practices, it has been easier and faster for some managers to resort to hiring under the maxim of "the more people the better"…
But the crisis does not allow excesses in the income statement and the percentages of personnel cost over sales reach unsustainable levels. In these cases, a quick streamlining path is layoffs and EREs.
At the other extreme, there are companies that have reached the crisis with their homework done, the costs assessed and focused on bringing a maximum value to the market to facilitate their translation into income that is so necessary at this time.
Thus, it remains to ask ourselves, will we learn something from this crisis in terms of people management?
Based on our experience, we propose here some aspects for reflection:
- What is not measured is not managed, and what is not managed cannot be improved. You have to be more analytical. Continually questioning what we do and how we do it, but always endorsed in analysis and data, in order to make the best decisions. Measuring the productivity levels of all our activities will serve as a starting point to better manage. A few months ago we found a productivity level of 42% in an industrial plant, just because productivity was not measured and because the processes were poorly defined and inefficient. It is useful to convince yourself, to establish comparisons with the practices that prevail in more efficient sectors as a starting point to improve ours. In the reference case, improvements of 40% were achieved. Personnel costs must be controlled even in times of growth.This principle, of permanent application, clearly points to two closely related concepts. The first is that we must question the rationale for many tasks and activities and their value to customers. The second is that people must work with an adequate level of saturation. It is not so much about our people working more hours than stipulated, but rather that we focus them on doing important things, which help build market value, as well as learning to do them with fewer resources. Applying these principles, recently in a finished product warehouse, it was possible to increase the team's productivity by 32% in a few months, with one less shift and a 3-point improvement in the service level. Reflect on your team and retain talent. Talented people are more productive.Differentiation in the market is increasingly marked by talented people, not by systems or products. We have to have the best in each position, and that they have very competitive conditions. It is vital and task of the management, to achieve their involvement and dedication to the business project. Only with people who are involved and dedicated will we be able to overcome difficult situations, and take advantage of the opportunities offered by crises. Implement management by objectives at all levels of the organization. Improven's experiences reveal that it is a healthy practice, which makes people more comfortable, in addition to substantially improving productivity. Managers and middle managers should be measured not only in terms of customer service, or market share growth,but also by improving productivity and profitability in the area of responsibility. It will help keep our ratios balanced, encourage continuous improvement, and focus our people on what is important. We have to properly plan the personnel restructuring process. The earlier this process is planned and the more the human component of all participants is taken into account, the better. You have to give time, work on internal communication, and encourage the relocation of staff and their functional mobility.The earlier this process is planned and the more the human component of all participants is taken into account, the better. You have to give time, work on internal communication, and encourage the relocation of staff and their functional mobility.The earlier this process is planned and the more the human component of all participants is taken into account, the better. You have to give time, work on internal communication, and encourage the relocation of staff and their functional mobility.
Fortunately or unfortunately, extreme situations tend to be the most conducive to initiating change. Let's take advantage of this coming new year, to learn about what we did not do, or did not do well, making room for the changes that guarantee our income statements and the continuity of our people and organizations.
