Low-performing Organisations, a Fear of Change

The economic market is changing almost by the minute as customers demand higher and increasingly adaptive customer service initiatives. Technological advancement is shortening people’s attention span, and patience is ever-decreasing as technology speeds up transactional events to the extent that delivery is expected instantaneously.
 
Change within an organisation refers to the actions that alter a significant component of its operations. A change might include its culture, internal processes, underlying technology, infrastructure, corporate hierarchy, or any other critical fundamental organisational aspect. The drivers of organisational change are many and varied but may include the following:

• Organisational mergers and acquisitions.

• Economic downturns.

• Expansion into new markets.

• Growth opportunities.

• Challenging trading conditions.

• Shifts in strategic objectives.

• Technological developments.

• Government policy and economic trends.

• General legislative changes.

Organisational change should be thought of as a spectrum. At one end, high-performing organisations undertake adaptive changes. At the other end of the spectrum, low-performing organisations go through transformational change projects in which fundamental change is pursued. Typically, there are three change scenarios:

• Adaptive: involves small and incremental changes adopted to address evolving organisational change needs. Typically, these changes are minor modifications and adjustments that high-performing organisations fine-tune and implement to execute business strategies.

• Innovative: usually occurs on an ad-hoc basis and may be irregular but results from new ideas, products, or the need to take advantage of fleeting opportunities where speed is of the essence to maximise the benefits of change.

• Revolutionary: transformational changes tend to be extreme. They are more significant in scale and scope, involving a dramatic and sudden but occasional departure from the typical business pattern, such as launching new products or services or expanding sales internationally.

Achieving organisational change requires a relentless commitment to see change as an evolutionary process that must include those affected most by the necessary changes. Most organisational change initiatives fail because of low-performing Directors and Team Leaders who:

• Fail to understand the need for change.

• Lack of an understanding of the dynamics of organisational change.

• Refrain from seeing themselves as change managers.

Successful change projects require a multi-level approach to ensure their success, from support at the Director level to ownership by those most affected by the change and, crucially, continual support for change by all organisational Directors, Team Leaders and staff.
 
A failure to adapt to changing environmental and economic market conditions will eventually lead to the organisation failing financially. Some slowly as the economy and marketplace shift over decades, whilst others may be driven out of business in months.
 
Low-performing organisations need to see that change is a fundamental part of the business life cycle, in which change needs to be proactively managed. The organisation will be owned by the shift to minimise the financial advantages of change in lost revenues as they fail to adapt. In contrast, high-performing organisations seek to own and manage change proactively to maximise the economic benefits of change.
 
Organisational change increases growth opportunities by allowing staff to acquire new skills, explore new opportunities for personal growth, and exercise their creativity. The demands made of them through change provide an opportunity for their self-development, benefiting the organisation through innovation, fresh thinking, and increased staff commitment.
 
Effective organisational change attracts new customers and increases customer engagement and satisfaction, promoting increased market competition and growth. With a proactive stance concerning change, high-performing organisations keep pace with the competitive forces of an evolving marketplace and economy. A failure to adapt to change may lead to the following organisational disadvantages, most seen in low-performing organisations:

• Poor financial performance and losses.

• Reduction in organisational quality standards.

• Lowering customer service levels.

• Missed opportunities for growth and increased sales.

• Lower staff productivity rates.

• An inability to hire or retain staff.

• Increased staff absence.

• Low morale among staff.

Complex organisational change issues may present unexpected challenges and obstacles for low-performing organisations. They may need help as they require an increased ability and political will to adapt and change. Change management means expecting the unexpected and proactively taking action to deal with change.
 
A change management strategy emphasises the importance of planning and communication when dealing with change. Directors and Team Leaders must involve staff from all levels of the organisation to get them on board with new ideas, change initiatives and processes. Short-term achievable change management goals and easy wins must be incorporated into the change management processes to encourage staff enthusiasm, engagement, and morale.

More articles can be found at Procurement and Supply Chain Management Made Simple. A look at procurement and supply chain management issues to assist organisations and people in increasing the quality, efficiency, and effectiveness in the supply of their products and services to customers' delight. ©️ Procurement and Supply Chain Management Made Simple. All rights reserved.

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The Issues of Low-Performing Organisations

High-performing organisations generate their energy to succeed. They induce staff and Team members to elevate themselves to perform at their highest potential. However, even though people achieve more in high-performance environments, staff and Team members tend to find working in such an environment less taxing. The working day feels shorter and vastly less frustrating.

At the other end of the scale, low-performing organisations are plagued by dysfunction, are incredibly stressful to work within and suffer from inconsequentially low levels of customer service. Leadership's most common failure points are the most challenging part of a Director or Team Leader’s role. Poor-performing Directors or Team Leaders blame the wrong people, fail to hold people accountable and give little or no direct feedback, especially when it is negative.

These management and leadership aspects push the Director or Team Leader into an uncomfortable zone. They don't have the support, resources, or skills in these critical areas, especially in large corporate or public sector organisations.

There appears to be a high social price and a substantial personal risk in the Director or Team Leader's future if they dare to deal with the issues of low staff or organisational performance. Directors or Team Leaders become incredibly risk-averse when managing low performance. The problems are apparent when it comes to dealing with the following:

 

• Unproductive staff.

• Staff who lack the intellect or intelligence for the role that they have been engaged.

• There is no political will to overcome the organisational weaknesses.

Low-performing organisations suffer from an incredibly diverse range of issues, which have been allowed to develop into significant problems, typical examples of which might include:

 

• Public Sector Bodies that fail to ensure compliance with the UK Governments Procurement legislation. Every year that these organisations fail to follow such practice increases their costs by an average of 2 – 7% per annum ahead of the open market, depending on the Consumer Price Index (CPI) rate.

• A Heavy Construction Equipment Dealer importing construction equipment from Europe. The construction equipment was CE-compliant upon import. However, it was sold to UK customers without CE compliance when the construction equipment was adapted for the UK Market. The organisation failed to ensure CE compliance by implementing model-specific fitting instructions for UK-sourced options and attachments. The organisation also failed to mitigate any commercial risks of equipment failure by ensuring that the threat was transferred back to suppliers by having the appropriate customer/supplier contracts in place.

• A Construction Company failed to manage its Accounts Payable Invoicing system, resulting in over £5M worth of supplier invoices remaining unpaid for over two years. The high value of outstanding invoices made it incredibly difficult for the organisation to raise finance, pay its suppliers, and deliver construction projects on time. The issue of unpaid invoices pushed costs up as suppliers viewed the risk of doing business with the organisation as unacceptably high.

• A Retail and Manufacturing operation failed to manage its Manufacturing Requirements Planning (MRP) system, which increased the lead times for raw materials, subassemblies and finished goods. The increased lead times led to significant customers being lost as lead times, stock levels, and capital tied up in stock increased whilst product availability, profitability and sales were reduced.

• A Manufacturing operation failed to match demand with supply, leading to products being manufactured without levelling production schedules to maximise manufacturing efficiency at least cost. The low availability of stock increased the value of customer back-orders, order lead times, risk-hedged stock levels, supplier minimum order values and stock obsolescence costs. There was a resultant reduction in customer order fulfilment rates, cash flow, sales and profitability.

Within the UK, four in ten UK business organisations fail within five years of their start-up. This could be for several reasons, such as:

 

• Weak leadership: A director or Team Leader who excels at leadership will communicate, direct, reward and offer the opportunity for personal growth to their staff and Teams, whilst a poor leader will demotivate and allow their Teams to become ineffective as they fail to inspire those around them.

• Bad Planning: failing to prepare is preparing to fail. Long-term Planning is the key to success. When mapping organisational growth, a Director or Team Leader needs to conduct market research to establish their customers and their requirements.

• Lack of Strategy: Without a well-thought-out strategy, an organisation does not have identifiable business objectives and will lack the focus required to achieve its goals and objectives to move forward. A lack of goals and objectives means that an organisation will not have a clear vision of its future. Goals and objectives are used to develop long-term growth and productivity plans for the organisation’s sustained success.

• Losing Financial Control: An organisation must always know its financial and cash position. Accurately forecasting income and costs is a pre-requisite and will ultimately support an organisation’s cash flow. Directors and Team Leaders must understand and control their costs and acknowledge the risks and opportunities to minimise any nasty surprises. Inadequate financing can lead to the failure of an organisation, as without access to sufficient capital, an organisation may not have the funds it needs to grow.

• Poor Cash Flow: Cash flow is the lifeblood of any organisation. Poor cash flow management can lead to the demise of any organisation. Even a profitable organisation can incur a crippling cash flow crisis. It is often caused by the ineffective management of debtors, high stock levels, bad debt and late invoicing.

Low-performing staff, Directors and Team Leaders drive low-performing organisations. Poor performing Directors set the culture that ensures low performance across the organisation, as they fail to:

 

• Integrate horizontally between functions.

• They do not listen to cross-functional Teams.

• Talk to staff to get a steer on issues.

• Mentor and coach Managers in the development of tactical planning.

• Seek input to create the organisation’s strategy.

Team Leaders set the performance criteria to ensure low performance across the organisation, as they fail to:

 

• Tactically plan to achieve higher performance.

• Plan for improvement and productivity gains.

• Set sufficiently challenging performance targets.

• Communicate with staff.

Customers do not have a right to incur poor performance. Directors and Team Leaders need to be accountable for the organisation's performance. Organisations fail to manage accountability, as low-performing Directors and Team Leaders are allowed to remain low-performing Directors and Team Leaders rather than being dealt with.

Low-performing Directors and Team Leaders also forget that staff are paid for their services in exchange for a salary, preferring to prioritise staff "rights" at the expense of customer service. High-performing Directors and Team Leaders know that staff and customers have equal importance and never put one at a disadvantage over the other.  

More articles can be found at Procurement and Supply Chain Management Made Simple. A look at procurement and supply chain management issues to assist organisations and people in increasing the quality, efficiency, and effectiveness in the supply of their products and services to customers' delight. ©️ Procurement and Supply Chain Management Made Simple. All rights reserved.

#procurement #procurementtransformation #procurementmanagement #procurementstrategy #supplychainmanagement #supplychain #supplychainexcellence #purchasing #purchasemanagement #commerical #business #managementconsulting