Archive for January, 2009

Poor profits fuelled by unemployment

It’s inevitable that as companies such as Barclays, Lloyds TSB, Marks & Spencer and even Tesco suffer reduced profits they are developing a strategy that reduces costs by reducing staff.
Such companies then create smaller working teams or integrate the remaining staff into other departments together with their responsibilities.

There is a hidden downside with this strategy.That is that often there isn’t enough time, or motivation due to a sense of emergency, to integrate the new team properly so that they are capable of being as productive as they might be.

Our research, over nine years, into individual and team productivity following the integration of new people shows that only 60% of such changes deliver the results that were anticipated.

Poor communication, lack of understanding of team results and changes in management style all contribute to the potential failure. The result is that costs rise, goals and opportunities are not met and this results in further downsizing.

Companies that are changing their teams need to consider that they are in effect changing the make up of the team dynamic and need to consider a integration period in exactly the same way as if they were to be introducing a new members of staff

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Maintaining Productivity in Downturn

A major challenge for business leaders is to maintain organisational productivity. (Formally defined as the ratio of an organisation’s total output to total input, adjusted for inflation, for a specific period of time).

Yet is this challenge made more difficult during a downturn?

One of the inputs in the formula is the workforce but at this time when many companies are laying off their people talent. The question that should be asked is how this affects the productivity of those that remain and can improvements in productivity be sustained under such circumstances?

During the previous downturn I was involved with a company that made a series of redundancies and each time a new redundancy was announced productivity collapsed in other parts of the organisation. This wasn’t to say that people seemed to stop working, on the contrary everyone seemed very busy.

However, productivity continues to fall as people discussed the worsening situation and the company’s Directors buried themselves in their offices stating that they were busy “saving the company”.

Too often business leaders might assume that they are unable to positively affect the situation and that under the circumstances a drop in morale is inevitable. I disagree with this assumption and advise far greater “management visibility” at such times.

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