Managerial Presentation for Timely Business Problem Essay
Having an effective way of dealing with the current global financial crisis is critical if organizations are to break even from their current state of bankruptcy. There are many ways in which this can be done but it is important that management teams are cognizant of the need to break away from otherwise traditional ways of doing things and move on to take steps that may be deemed out of place or even unethical. Such will include cost-cutting measures like selling of some organization assets, laying off unproductive and/or unwanted workers, and using approaches like outsourcing of production instead of relying on hire staff.
It is also important that managers are able to embrace the use of technology well; ponder the possibility of cutting or selling off unproductive lines within their organizations; and/or even merging some of these divisions with others. In extreme cases, organizations can restructure by following the example of Nissan and Renault and merging their assets and operating to form one bigger, more viable company. Careful recruitment is also an ideal approach that can be used to bring about a rebounding of organizations from the global financial and economic crisis.
The main underlying factor in al this processes is
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Every one of you here must have sighed with relief at the news that the federal government was planning a massive spending to bail out troubled yet critical organizations. You probably managed to smile for the first time since the onset of the crisis in the 2007/2008 period, because a lot of pressure had remained on your organization to make some sense out of the awkward financial situation that it found itself into following this global economic crisis.
But when public outcry was more than anyone might have expected and the government had to limit its bailout to only a few institutions, many of you were left wondering where to go in search for help (Obama, 2009). The good news is that you need not worry any more if your organization is struggling to recover from the crisis for the key to recovery is neither in the hands of the government nor the performance or state of the world economy but is right in your own hands! And I am here this day just to show you how to go about making the necessary changes needed for a sustainable turnaround of the fortunes of your organizations.
In his speech, president Obama (2009) said that government bailout is all out of reach now, and the only remedy is for leaders of the leading financial institutions is to change structure of their entire firms. This will take many forms and different strategies – many of which are costly – but it is worth it all. Restructuring has proven to work in other places and it is my pleasure to bring your attention to this. First, the Japanese auto giant Nissan was in the turn of the last decade on the verge of collapse. Not a few people and chief executives like you had written off as beyond recovery.
But the company hired an operations manager who knew how best such companies needed to be run. The first approach was to set a plan for the recovery process by which time it was expected things should be back on track (Lahart, 2007). Next, an ambitiously restructuring process followed. The company’s many assets which were by then of no real use but were just consuming money were disposed of and the proceeds from their sale reinvested into more productive divisions. Other divisions were closed down and the redundant workers were send packing.
By the time this reformer was elevated to the post of company chief executive officer, Nissan was starting to show signs of recovering. Within a year after take over the operations of the company, it was able to register a massive profit after an almost equal loss the previous year. The case of Nissan is still fresh and it s its approach that we al need here. We need to be very courageous to defy traditional business practices for the success of our organizations. This time, for instance, is not the time to hold onto a large workforce and to pay astronomical bonuses.
Instead, we all need to be very courageous and defy this tradition that has lasted for a long tine in this country’s financial services sector. Why reward anyone when the person cannot turn around the fortunes of the company? Of what value is it to retain an employee if one’s output level constitutes only about half of what one is paid? No doubt you every one of you is under pressure from employee unions to ensure employees are not losing jobs. but for how long can this happen when there is no money to pay them. Look at the alternative – retaining the employees and losing the entire company as a result.
According to Lahart (2007), it is better to lose a fraction of underperforming employees and have the company recovering. Consider objectively the kind of services that are available and the expertise of the worker present to do the work. think of it in this way: if a worker employed by the company will cost an extra dollar more than a worker hired just for the job only and on a temporary basis then lit is about time the company used more outsourced labor than in-house service. Outsourcing has worked for banks in Japan and China where they only hire staff for the very technical jobs that require a lot of specialized skills (Lahart, 2007).
Through this approach, you will save on the astronomical amounts you pay on bonuses, wages, and pensions. Another restructuring approach desirable is the organization culture – the way we conduct affairs within our institutions. Everyone in the world knows of our lackluster nature and our inherent tendencies to fail to adhere to acceptable patterns of doing business (Reuters, 2009). We must accept blame for sparking off the financial meltdown that rocked the world for our careless lending culture. To recover fully, we need to be more stringent min our following of lending rules.
According to Steverman & Bogoslaw (2008), complacency and deviation from the norm is in this aspect undesirable. We need t understand that although there are regulator bodies in place to monitor our actins, they cannot be relied on to help us recover (Steverman & Bogoslaw, 2008). Then we all need to get rid of these assets that have been lying idle for the last many years but which the organizations are reluctant to dispose of. Now is the time to take stock of the assets of the company and assess their worth to the company on a monthly or term basis.
If an asset is not adding anything worthwhile to the company than it is about time it was disposed of. By extension, there is a need to do away with the extra lines of production that although are very unprofitable your company still holds onto for some reason. Here is a life-and-death situation and there is no need to hold onto some additional weight that might sink you altogether. Get as light as possible by slashing throwing off unnecessary weights. Every tree has to be pruned to be fruitful even when all the branches are heavy with fruit. It is better to lose some fruits now but have more gain from the tree later.
Times of crisis like these are not the times to be far away from your employees (Bogle, 2005). It is time to work with them for mutual good of the company. Let them know of the dilemma the company finds itself in and give room for recommendations. They might just as well be sources of a lot of recovery ideas you never envisioned or which you put off as being unrealistic. Many companies that have opted to work with and not against their employees have managed to come out of the economic crisis faster because employees offered to be part of the solution that was being sought.
Some have opted to work for no pay for some period of time while others have decided to have most of their allowances forfeited for the sake of having the company recovering. Therefore, you need to speak to your staff concerning your situation and about any plans for future operations at the organization. Another issue that needs your attention is the role that is usually played by technology in restructuring. It is critical that before any worthwhile restructuring is able to take place, an effective technological review of the available technology is done so that you may chose from it the most suitable and to apply to your organization.
Sometimes using the right technology is all that is needed for struggling organizations to recover. This is because the use of new technology can enhance organizational effectiveness and improve its rate of turnover. In banking, for instance, technologies like e-banking as opposed to retail banking can greatly improve the performance of an organization as this form of banking eliminates costs associated with having bank branches located in different parts of the world.
As Bogle (2005) puts it, traditionally, organizations have remained subservient to cultures that are counterproductive such as failure to embrace change even when it is clear that the change is ideal for organizational development. There is also the need for your organizations to consider merging with others or merging certain divisions within the organization. Starting with the later, there are divisions within the main organizations that can be successfully merged without having to significantly affect production levels. The motive is to cut costs and increase profitability.
That aside, this period of crisis is actually characterized by a general decline in the level of customers. As such, this is the only time to turn those ineffective departments into more useful ones by linking them up with complementary ones. However, if the organization proves to be so much in need of assistance and yet there seems to be no workable solution, it is time the merger way is adopted. Merging means that although two or more organizations might be struggling individually, the conglomerate might not be able to struggle but might actually come out stronger.
This is because a weakness in the one might be overcome by strength in the other. A string with multiple cords is more resistant to pressure than one with a single cord. Mergers have been a common practice in business and have worked tremendously well. The case of the Nissan-Renault merger can best illustrate this. The conglomerate is now one of the largest auto companies in the world. And yet you all know where Nissan and Renault were headed. However, before any merger is done, it is important that a unilateral restructuring process of the individual firms is first done to enhance the chances of survival for the conglomerate.
It is all about seeking to pool resources together and to share. According to e-How (2010), another critical restructuring process that can be adopted is to have a very rigorous recruitment drive for the organization’s staff. In the face of the financial crisis, it has been very common for organizations to experience high rates of employee turnover because this is a time where employees hardly settle in one place. Therefore, it is important for organizations to be ready and prepared for the massive shifts of staff.
But the best way is not to wait for the moment when employees have left for you to start looking. It is time you used offensive tactics as offence in business is usually the best defense (e-How, 2010). So, you ought to move in and ensure that you advertise and recruit staff that can best cope with the changes you are making. Sometimes people who have stayed around too long can be a real impediment to organizational development by resisting changes. In addition, old folks can become too accustomed to the organization that they cannot really change as required.
You need to identify this as a hindrance to a restructuring process of any kind. So get to recruit new staff. Recruitment will entail having a performance-based criterion where the most successful recruits are those who have the most relevant qualifications as far as the work is concerned (e-How, 2010). Having said all these things and enumerated all these strategies, it is critical to let you know that the key to your coming out of the financial crisis currently facing your organizations is within your own hands – you only need to choose to use it appropriately and all will be well.
The government cannot be expected to help much, the others cannot help you either – you can only help yourselves to break even from the crisis. Others have used the same approach before and have come out of even more critical situations than yours. It is upon you now. Word count: 1,945 References Bogle, J. (2005). The Battle for the Soul of Capitalism. Yale University Press e-How (2010). How to Restructure a Company to Increase Profits. Retrieved at: http://www. ehow. com/how_138765_restructure-company-increase. html Lahart, J. (2007).
“Egg Cracks Differ In Housing, Finance Shells”. The Wall Street Journal Obama, B. (2009). “Obama-Regulatory Reform Speech June 17, 2009”. Whitehouse. gov. 2009- 06-18. Retrieved at on 06/07/2010 at: http://www. whitehouse. gov/the_press_office/Remarks-of-the-President-on-Regulatory-Reform/. Reuters (2009). Three top economists agree 2009 worst financial crisis since great depression; risks increase if right steps are not taken. Business Wire News Database. Steverman, B. & Bogoslaw, D. (2008). “The Financial Crisis Blame Game. ” BusinessWeek