Q Over the years our organisation has experienced constant change. First, we went through cycle of creating central support functions to reduce costs and then after few years turned around and totally decentralised the operation to increase accountability and motivation. Is this common?
A It is not unusual to experience constant change. An employee of large New Zealand organisation told me he had experienced 18 restructurings in the 15 years of working there. It left him virtually immune to change and somewhat cynical.
Change is necessary but too much and you get the result described above; too little and the organisation becomes stagnant and inflexible. Apart from deliberate strategic change there are also two cycles operating within larger organisations: the centralised versus decentralised cycle, and the marketing and sales versus finance one.
In the first there will be very good reasons for centralising the organisation: for control; to reduce costs and increase efficiency; or to make effective use of scarce resources. These are positive gains, but over time the organisation becomes more inward looking because it isn’t close to the unpredictable changes that happen at the frontline. It becomes inflexible as unexpected change upsets the centralist balance.
There is then natural swing towards decentralisation. Now, decisions are made close to the action and the organisation responds to external demands quickly and innovatively. However, again there is destructive cycle. The organisation gradually moves away from its strategic direction, loses its way and can start to lose control over critical issues such as pricing and discounting. Hence there is then swing towards centralisation.
The second cycle is between marketing and sales, and finance. In very successful company the key management positions were held by people with marketing and sales backgrounds who could understand what was needed for the organisation. These people were good at getting the product out there but were not so good at managing key business drivers, such as cost and efficiency. The business gradually lost market share.
Then new managing director was appointed with strong financial background. He set very clear targets and goals and the company came back on track within year. The market at this time was very buoyant and each year the company grew significantly. Then the market peaked and it became difficult to maintain the same growth. The managing director, however, wasn’t close enough to the market to understand that it had topped out. He set rigid growth targets for the company. Very quickly the organisation became demotivated – until new manager was appointed, who – yes – had marketing and sales background. The company moved back to success and then the whole cycle started again.
These cycles are just natural part of running reasonably large organisation. The issue for the manager is to understand this and know when to intervene.
Q Are there any simple and well-researched competencies that I can use as guide for my continuing development as manager?
A Jim Collins (Built to Last), David Ulrich (Human Resource Champions) and John Kotter (Leading Change) have wrapped their heads round this one. In simple terms, there are three levels of management each requiring its own sets of competencies.
First up, there are the competencies that build the “capable manager” – people new to management, frontline and middle managers, and those who are likely to be appointed to the executive management team.
Collins, Ulrich and Kotter identify six key areas for capable managers to develop: broad management practical experience and general understanding of the theory of management; personal management skills in areas such as influencing, managing time, preparing reports and giving presentations; speciality that differentiates you and creates value for the organisation; an understanding of the range of business disciplines in your organisation; an understanding of how the organisation actually operates to see the bigger picture; and, good perspective on external issues impacting your organisation.
This leads to the next level of management – the executive manager who needs to maintain and develop the described competencies.
Executive managers must be capable of implementing the resulting organisational change when developing strategic organisational behaviours. Further, they must “walk the talk” and show personal credibility. Finally, they are in leadership role and therefore need to be capable of building vision that others buy into and want to implement.
The third level of management is the governance role. At this level board members or trustees need to be capable of working with the executive management team in building strategic direction. They will need to be capable of identifying the ethical values that will keep the organisation on the rails for the long term; to carry out effective monitoring and review without stepping too far into the operation of the organisation; and to be capable of coaching and providing appropriate support to the chief executive.
• Kevin Gaunt, FNZIM, FAIM, is CEO of NZIM Auckland and has been senior executive with, and consultant to, some of New Zealand’s largest companies.
