One of the biggest challenges facing senior level executives is to strike the balance between achieving business control and allowing your employees the freedom to innovate. The best businesses have the flexibility and imagination to respond quickly to their environment yet they have the processes and controls in place to allow for this to happen without chaos. How is it possible to strike such a balance in an organisation? Co-founder of the Ignite Group and current Acting CFO of Hakkasan Group, Paul Deeming, shares some secrets to balancing the business.
Times have changed dramatically but it always surprises me how simple it can still be to improve operational efficiency and effectiveness. There’s still a great deal of luck required to ensure that your business is in the right place, at the right time, offering the right product, of course. But often it’s the simplest things that can, in fact, make the most significant impact on output and, in turn, affect the ‘luck’ that comes your way.
Targets are the best places to start. How do you know if you’re doing well if you haven’t got the measurement mechanisms in place and you’re not measuring against anything pre-agreed. Far too often staff are managed from a distance and targets are set from a boss in an ‘ivory tower’, who can seem out of touch and uncommunicative. Taking the time to set personal targets for each individual, and have them take a lead in setting their own goals, may seem time consuming but by making someone feel responsible, the sense of ownership will pay dividends in terms of results achieved. If it’s vital for your business to cut costs, ensure that this is reflected in each employee’s targets. If it’s innovation that’s called for, then it needs to be measured and reported person by person.
In the same vein, ensure that budget holders are held accountable for their budgets and get them involved from the start of the planning process. Never ask someone to manage a budget they haven’t helped create. This makes it too easy to shrug off responsibility. If it’s your budget that you have signed off and you are being judged on it, you will make a commitment to ensuring it’s delivered as agreed.
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Set deadlines – and then stick to them. Procrastination can rob a business of vast swathes of time and money. If you get it 95% right this will usually be sufficient; don’t spend treble the amount of time trying to get it to 98% right. The incremental improvement isn’t usually worth the effort.
Where possible, try to set up your business so that you have the framework and processes for the next two or three steps in your growth plan, not just the next step. For example, if you are planning international expansion ensure that your IT and financial systems can expand with growth (don’t buy a UK-only accounts package). Retro fitting a system or ‘shoehorning’ into an ill-suited package will never give you the efficiencies you, your customers and stakeholders need in the business.
Ensure that you have regular reviews of supplier contracts. Suppliers do not want to lose business in the current climate and the cost to them of acquiring new clients will be weighed up with the cost of the improved terms you can negotiate. If you can consolidate your purchasing requirements with fewer suppliers this will give you further bargaining power. Never accept the first offer. Obvious, but true.
It wouldn’t appear on the surface that creativity and control make strange bedfellows. But the businesses that are most admired are those that nurture innovation and then work out how to bring that innovation to market. Some great ideas will fail. Let them. But learn from them too and make sure that you don’t continue to invest too much into things that aren’t working. Admitting that something is a dud is hard to do but a significant part of the management of innovation.
Creativity can come from any area of the business and it’s important to support your employees as they innovate on your behalf. A famous story about Alexander the Great, then conqueror of the known world, reveals a worthwhile truth. He asked the philosopher, Diogenes, if there was anything he could do to encourage and support his vital work. The philosopher’s answer was “Yes, you are standing in my light. Please move.” Senior managers do need to step out of the light occasionally, in my view, and let the work continue and ideas develop.
Finally, the single hardest thing for any business to do is to engender a workplace ethos that ensures people feel valued for the work they do. This can’t be done by guesswork. Guesswork from you about what your staff understands; or guesswork from the staff about what you really want from them. Communicate your expectations, create the environment where this expected behavior can flourish and reward those that deliver what your business needs.
The fundamental component of the reward process is to highlight the desired behaviors and attitudes. This will ultimately lead to a change in group behavior, setting the bar on expectations and conditions for the future – both from an employee and an employer point for view.
Google springs to mind here. The company has rigorous processes and controls in place, yet it has the foresight to give its employees the freedom and space in which they can be innovative by taking ownership of individually-headed projects. Google is an industry trend-setter; its company ethos is a core driver behind its position in the market.
Remember, people will always be more efficient when they are in a business where they know what is expected of them, they know what they do has a direct influence on the business, and they are given the support and encouragement they need.
These are challenging times for any business. Now more than ever there is a need for internal assessment of processes to increase efficiency and effectiveness within an organisation. Efficiency tends to deal with ‘things’; effectiveness tends to deal with people. Equilibrium is the goal.
A see-sawing business strategy that asks the impossible – don’t spend money but improve our service and market leadership – wastes energy that can be used for better good when a balance is achieved. Just because the pressure on businesses has increased in the last few years, the highs and lows of surviving a tough economy shouldn’t distract a business leader from the need to balance.