I usually send a newsletter to tell you about me. This one is to share a few observations and reflections. I hope you will find it useful food for thought.
About the crisis in Romania
On this trip to Romania, I have been struck by the number of times I have heard leaders and managers pronounce the word “crisis” to describe the present economic situation. Indeed, it seems almost socially fashionable for the whole Romanian population to have long discouraged discussions on the subject.
Note that along with the use of this word comes a commonly accepted frame of reference: the present situation is perceived as temporary. When it will be over, all will come back to normal, that is to say: to what life was before the crash.
Consequently, a large number of people are bracing to wait out the crisis, hoping it will be short. Some self appointed futurologists are reinforcing this idea by announcing probable dates, such as 2010, maybe early 2011.
For organizations to survive through this period, the main fatalistic financial strategy is very logically first to cut all expenses that are not perceived as productive, second to downsize production. When times are good, spend in marketing and hire personnel. When times are hard, cut all unnecessary expenses and fire. To be sure and for lack of real leadership, that must be the pinnacle of current strategy.
This is not a crisis but an adjustment
Imagine, however, that the business environment in Romania will not shortly return to what it was. Consider that the presently perceived temporary crisis is really a permanent adjustment to the larger European and global economic environment. Envision that all the market segments that have grown by over 20% yearly to rapidly boost Romania towards consumer maturity will never again develop in the same exceptional proportions.
This alternative frame of reference may drive individuals and organizations to radically reconsider their present strategy consisting in cutting costs and just waiting it out, hoping for the best.
If one chooses to believe that things will never be the same again and that the future will be completely different, then it is urgent to make courageous decisions and take action without delay.
Consequences for leaders and managers
Preparing for a deeper transition in the present economic situation calls for a completely different type of leadership and management style. When the market grows by double or triple digits yearly, basic management decisions are the rule. Invest heavily in every possible direction to occupy the terrain, develop visibility through intensive marketing and pacify your personnel with lavish spending. Indeed, employees will be reasonably happy if they can personally benefit from the booming economy with a regular substantial increase in their personal lifestyle.
Exceptional growth in recent years has permitted a large number of quick promotions, a huge surge in per capita income and the creation of a consequential middle and upper class. Anyone with reasonable expertise is now enjoying a managerial or executive position. This miracle has been achieved within a decade thanks to the booming Romanian economy.
Note however, that a large number of people holding relatively important leadership and managerial positions have achieved professional success by simply surfing on the market and not making too many mistakes. If nine percent growth has placed Romania in the first ranks of western developing countries, it has also lulled a large number of leaders and managers to believe their behavior was responsible for their organization’s success in the market’s natural expansion.
Reinforced by these relatively extraoerdinary results, numerous are the leaders who have developed a very satisfied, individualist, sometime autocratic and oftentimes arrogant management style. They may sometimes rather be perceived as having developed an attitude.
Organization culture consequences
The consequence in terms of management culture can be observed in numerous companies today. In the recent past, the best way to get an easy promotion was to develop personal career-oriented strategies: Always agree with your leaders and show evident signs that you admire them, never propose contradiction, avoid taking any original and successful initiative that may be interpreted as a threat to your environment, don’t take risks, hide mistakes and do not communicate bad news. In other words, lay low and reinforce management and executive egos.
As a result, numerous Romanian executive teams and top management have lost contact with what their employees really think. Worse, they often don’t even care. In numerous Romanian and multinational companies, one can perceive a deep schism separating upper management from their employees. This state of affairs may in fact be the real present crisis.
Leadership and top management urgently need to re-establish communication channels with their personnel to reinstate their company’s social contract. To do this, executives must rapidly develop their people skills. They need to learn to work together rather than agains each other. They need to develop respect for each other, for their managers and for all their employees to start tapping the unused, dormant potential within their organizations.
Today, it is no longer possible to display an attitude resting on the illusion that organizational success is the sole result of financial decisions made by a CEO. The whole organization needs to be collaborating and re-geared to ensure future collective success.
Executives first and then their managers also must start to really listen to their people. That means they have to stop pretending they have all the solutions and alone know what needs to be done to face a very uncertain present and a radically different future. Developing basic communication skills and the capacity to establish respectful relationships with the personnel is an urgent necessity.
If we believe that we are not going through a temporary crisis but that we must permanently adjust to a new global reality, then urgent operational decisions must be made and precise action must be implemented. The focus cannot only be financial and this calls for new priorities and competencies in the decision-making process of executive teams.
All HR strategies previously geared to spending money to pacify personnel and middle management must be redirected to helping them focus on increasing quality, developing effectiveness and delivering measurable results. Management must also learn new competencies. Rather than favor individual career-oriented relational strategies, it needs to develop more performing teamwork and collective performance focused on achieving measurable results. Beyond reinforcing individualistic strategies, learning how to manage and develop teams is the key to success on the future markets.
Training and coaching
Presently, the training profession is also going through a very difficult period. Lavish leadership roll-out programs focused on delivering leader-chic principles are being cancelled. It seems they are suddenly perceived as unnecessary expenses that have created very little measurable added value. Probably, training needs to be redesigned to very practically help develop everyday individual and collective behavior aimed at increasing operational results.
Interestingly, in this transition period, there is one profession that appears to be booming. Coaches who are well trained in accompanying individual and collective clients towards making the necessary urgent decisions to achieve measurable results are suddenly in excessive demand. Some of them are even fully booked.
That may be an indication that some have understood that the current situation signals a coming fundamental shift in the Romanian economic environment if not in the society as a whole.
I do hope that this transition is good news for you.