Change is inevitable, competition is cutthroat; shaking the very core of business existence and sustained growth. Increased regulations, constrained micro, and macro-economic factors, as well as increased uncertainty on global factors, lay heavy demands on businesses prompting radical shifts from the status quo.
We have recently witnessed tough calls made in corporations to mitigate the impact of change on business, in order to thrive in a dynamic and volatile environment. The reigning themes being budget cuts, massive layoffs, letting go of trusted senior staff, eliminating unproductive portfolios, and even closure of business units, among others.
What should a leader consider when making tough calls? Here below are some key considerations:
- What is the business strategy and what will it take to deliver it?
A well-conceived and carefully crafted business strategy should be the basis for change actions. The strategy defines key business actions among which tough choices must be made. The choice to fully implement a business strategy is a tough call in and of itself. The impact can be huge and far-reaching; however, a leader must remain focused to ensure full implementation.
Change must not be haphazard, it must be planned, thus the need for a well-crafted and comprehensive business strategy, which in turn informs the necessary change actions. This should give the leader and key stakeholders reason and justification to make tough calls in the face of change.
- What is the cost of each tough decision made and what are the benefits?
There is a cost to every tough decision; something a business parts with to gain another. This is ever so true where tough choices must be made in the face of change. A thorough evaluation of cost versus benefits is indispensable. Layoffs for instance demand financial and productivity costs. What does the organization stand to gain by such a decision and is there value in doing so? This also needs to be evaluated in the face of uncertainty and rapidly changing business landscape.
A change instituted today may not last long enough to realise the payoff before a major shift in the business environment, significantly undermining the originally envisioned benefits. There are circumstances where corporations have laid off workers, only to hire an equal number or more after two to three years of instituting the change, thus rendering the exercise counterproductive.
- How long will it take to realise the intended benefits?
Protracted or out-of-scope benefits realisation does not form a strong and compelling business case for change; in this case for tough choices. Changes, where no tangible benefits are realised within a reasonable timeframe, can have a terrible backlash on the business and could affect future change efforts.
In this sense, it helps to run the change management component as a timed project with tangible and measurable benefits alongside business strategy implementation or whatever business initiatives that bring about change. Planned change cannot be indefinite; benefits must be intentionally tracked, realised, and measured within a reasonable timeframe.
- How well have staff been involved in the process, whether for good or not so good outcomes?
The tendency has been to not involve staff for fear of repercussions. Leaders must, however, understand that not involving staff has worse repercussions than not. Additionally, in the face of change, whether staff are involved or not, a major constant is a decline in productivity. Therefore, a leader’s concern should be to mitigate the effects of declined productivity in the face of change.
Where tough decisions must be made, involving employees while honestly communicating facts and demonstrating equity, respect, and care, helps both the organization and those affected to cope with the impact. It is desirable for employees who suffer from such tough decisions to walk away saying “I believe the change was necessary and my organization did the best it could to support me”. As opposed to an organization gaining a bad reputation for being an uncaring employer.
- Is the leader taking full responsibility?
When all is said and done, the leader takes full responsibility for the change outcome. She or he must be accountable to shareholders and must make those below accountable for their actions. It’s that simple; yet because of possible high risks in the face of change, responsibility and accountability must rest with the leader. This realisation helps to exercise due care and adherence to above-board standards and processes while making tough choices in the face of planned change.
Carlos Ghosn former CEO of Nissan Renault Alliance, who is also respected for turning around Nissan from bankruptcy to profitability in less than two years back in 2000, committed to resigning together with his senior executive team if he had not turned in a profit in a year. He did it…but alongside taking full responsibility, had to make several other tough and unpopular choices.
Whatever the nature of change, there is bound to be some level of discomfort especially when tough choices have to be made. This should however not be cause for anxiety and unbearable discomfort. Leaders must ensure that choices made as a result of corporate change are informed by the business strategy, are clear on the benefits to be realised, there is a reasonable time to realise these benefits, staff are involved from beginning to the end through a well-designed and implemented change management strategy, and that leaders take full responsibility for results.
Written By Dr. Mwaniki Mburu