Six Steps to Help Cope With Uncertainty
L. Douglas Mault
October 2007In this third and final article in this series, let’s review six key steps an owner/senior manager can take to help deal with uncertainty. In fact, one of the key responsibilities of the owner/senior manager is to lead the organization ahead despite all of the uncertainties. Not always an easy job, but one that must be done.
Number One: Speed up and improve the flow of information.
By developing and sharing timely and accurate information, you become more able to respond quickly and effectively when problems arise. Which of your services and/or products are truly meeting customer needs and which are not? Professor J. L. Bower of Harvard Business School says, "You really have to understand where you are making money and losing money, literally by product (service) and customer.”
Number Two: Keep your best people without overpaying.
According to Marion McGovern, CEO of M2, the key to retaining professionals is enabling them to build and maintain their intellectual capital by offering a diverse set of tasks, opportunities and challenges. The key to retaining non-professionals can be as simple as setting up family friendly arrangements such as flex time, working from home, and telecommuting. Anything that humanizes the workplace will likely result in decreased turnover.
Number Three: Control fixed costs.
In uncertain times, refocus some of your energies and thoughts not on the grand plan and vision but on the mundane and everyday. Lease instead of buy. Use temps or contract workers. Outsource.
Number Four: Train and re-train your employees.
Peter Drucker, a writer, management consultant and university professor, stipulates that the companies with the best trained workforces will ultimately prevail in uncertain times. Focus on hands-on product and process training but, much more importantly, on human interaction and inter-personal behavioral training.
Number 5: Build Financial Awareness.
One resource, from the December 1998 issue of Harvard Management Updates, is Painless Financial Literacy for Your Team (and You). Do your key employees know how their department or unit contributes to the company’s performance? Do they understand the marketplace and the competition? Can they read a P&L? When people are more financially literate and understand the big picture, they are more likely to do what’s necessary and right.
Number 6: Write and keep contingency plans.
The environment might seem certain, but remember that Murphy is an optimist; something unexpected will happen. What are you doing to prepare for the unexpected? Grady Means of PricewaterhouseCoopers Consulting says, "Companies need to respond to quick changes without rethinking their whole business model.” You cannot plan for every eventuality, but you can set some triggers; for example, if revenues decline for three quarters, we will reduce staff; if gross margins decline for four successive months, we will renegotiate key vendor contracts, etc.
As with change, uncertainty will always be with us. If one waits for complete certainty, one may well make a perfect decision. Unfortunately, its perfection will be of no value because the decision will come too late.
About the Author
L. Douglas Mault is president of the Executive Advisory Institute, Portland, Ore. EAI can be contacted by calling (888) 428.3331.