Current Business Trends

By Dr. Ted Sun

Current Trends of Organizational Cancer

What are you doing to make sure to stay ahead of global competition…? 

How are you keeping up with the continuous changes in today’s economy…? 

What legacy are you leaving within your organization…?

These are the questions that face many senior leaders of organizations today.  Whether you’re a large corporation or a small business, similar challenges stares you right in the eye.  The global economy is constantly showing you how fast it’s changing.  So how are leaders like you responding to the challenges?  According to the latest McKinsey Quarterly survey of over 5,500 senior corporate leaders, confidence levels concerning the global economy, although positive, have declined by 6 percent since January of this year.  As competition heats up, three major trends organizations have surfaced.

What drastic actions are called for today?

Fast times calls for fast thinking.  Organizations are looking to reinvent themselves by buying the latest technology and hiring more people.  According to the Journal of Financial Planning, organizations spend as much as 10% of its revenue on technology.  In addition, as the turf battles continue within departments, the headcount race is still on.  Organizations are looking to hire smarter and cheaper labor.

From a technological perspective, many firms have an abundance of software and hardware to run three times their existing needs.  Imagine for a moment that you’re a CTO. The size of your budget depends on the number of servers you have and how much the business depends on your technology.  Often, the more technologically dependent, the more job security you have.  Isn’t it more important to protect your job so that you can feed your family than to eliminate half the hardware and software and risk loosing your job?  Since most CFOs and CEOs don’t understand all the basics of technology and how it can integrate with the people and its processes, it’s very easy to get lost in the “black boxes”.  When something goes wrong, through a system at it.  Trying to reinvent an organization through technology is a tough road.  Technology is meant to help people; instead, much of today’s technology enforces rules and procedures onto the employees – dictating the method of operation.

On the other hand, hiring more people to solve a problem is also very common.  Yet, according to studies, an average employee works 22 hours of meaningful work out of the 40 recorded hours of work.  According to the McKinsey Quarterly, senior leaders plan to step up hiring in order to meet the demands of globalization.  The math is pretty simple here – every new employee that you pay for 40 hours of work, you lose 18 hours of work.  How long before the economies of loss catches up with your organization? 

Most of the drastic actions taken by organizations are only symptomatic.  They are band aids to deeper issues.  At the root of these challenges, technology and people can be understood from a holistic perspective.  They go hand in hand, but only if they work together, not being dictated by one of the other.  For example, knowledge management can link the needs of people and the business.  One can easily eliminate many databases into a single data source.  This database would have information on clients as well as customer.  The information can be used to create a motivational system that increases the 22 hours of meaningful work.  The same system can be used to create an induction system, so that when you can capture the tacit knowledge within each individual, you also reduce the months of training time for new employees.  All of this is hidden profits waiting to be found without spending a bundle.

Where’s Your Work-Life Balance?

Ever since popularity of email, it’s almost a natural phenomenon to check your email after dinner or before breakfast.  Starting with flextime, many employees have the flexibility to work from home.  According to a study by the American Society of Training and Development (ASTD), more employees are telecommuting; they are overworked and stressed with the expectation to be available 24/7.  Employee burnout has become a major topic of concern.  According to the Business Source Premier, job stress and burnout are costing the U.S. economy more than $200 billion per year.  On one side, people are changing jobs every 2-4 years.  On the other, the levels of stress in most organizations are causing more unexpected heart attacks and other major diseases.  Which side are you facing?

There was a line between work and personal life…where did it go?  As more and more technology gets introduced into society, the ability to reach out and disturb someone is as easy as a finger away.  In order to serve the customer or the demand of the organization, the line between work and personal life has diminished.

Looking from a physical perspective, a thriving industry for chiropractors and massage therapists have evolved.  They exist just to take care of the back pains and neck problems that are caused by stress from the lack of balance.  In order to change this pattern toward physical pains and mental discomfort, a few leaders are drawing a boundary by creating a personal vision statement.  The statement rests on the foundations of their values.  As a guide, this vision helps these leaders form a default schedule in which all people have to respect, even the customers.  Within months, they have found an extra 10-15 hours per week, while some is now able to go on vacation once a month.  Balance in life is crucial to your organization’s success.  In addition, balance will reduce your health insurance costs, increase productivity, and create a lasting legacy that means something good.

How would your employee rank your ethics?

As mentioned earlier, burnout and stress are costing the U.S. economy more than $200 billion per year.  Another study reveals only 22 hours of meaningful work out of a 40 hour work week.  What are these indictors telling you about how much people trust their organization?  Would you trust someone if they constantly stress you out?  Furthermore, business scandals like Eron, WorldCom, Tyco, Global Crossing, Adelphia, and many others have dramatically amplified the awareness of ethical behaviors of corporations as well as their senior leaders.  Based on these events, the degree of trust in most organizations is at an all-time low.

From a recently released Leadership Forecast study by DDI, 57% of the surveyed 1,600 senior leaders were taking action to pay more attention to their ethics.  Many have created some form of ethical training for their management staff.  Yet, most of these programs lack an accountability structure, according to ASTD. Is it ethical to provide training on ethics and not follow through with holding employees accountable to the training?

Since the latest current events, the term unethical behavior is more commonly used amongst employees in reference to their leaders. In order to avoid being labeled as unethical, senior leaders must take an active role in “walking the talk”.  Yet, after all these years of moving fast, it is a huge challenge to learn to slow down.  For example, a large corporation states that they value growth. They encourage employees to continue to grow through education and training.  Yet, in their employee policies, only a percentage of tuition is reimbursed for a MBA program.  Another major medical company also stated that they value growth, but its policies are biased with business needs.  For those employees who don’t get the funding they require for education, the value of growth is conditional…so, is that ethical?  These policies and practices are organizational cancers.  They inherently inform the employees that they too can be inconsistent in their behaviors and not walk the talk.

Having an external view of corporations’ policies and values could reveal a great deal of what employees truly think of their organizations.  Where do your policies and actions stand with your organization’s values?

Who’s in Control of Your Future?

Keeping these trends in mind, there’s plausible cause for concern.  In most situations, organizations look to marketing and sales to grow.  Yet, internally, there are countless many hidden treasures.  Pfizer, for example, took charge of their training and development.  Rather than ignoring the people problems, they took the time to learn and work through cultural issues like ethics.  After only one year of these new processes and designs, a 2% drop in employee turnover saved the company $2.4 million in its training budge.  Furthermore, these programs also rewarded a return on $3.6 million in cost avoidance and increased productivity.  You don’t have to be a rocket scientist to figure out the impact to their profit margin.  Imagine what compliments employees are saying about their leaders. 

And remember that 22 hours of meaningful work – what if you created a system that can increase it by 10% per employee?  Take the extra 2.2 hours of work, multiplied by the number of employees and average cost per employee, you could have millions, perhaps even billions, added to your bottom line.

There are four basic steps to making this type of impact happen. 

1. Think Outside of the Box – if you’re not doing something different everyday, the same issues will remain to be an organizational cancer.  Have external expert review the organizational design, policies, processes and culture.  Since you have created and worked in your organization, it is nearly impossible to see your blind spots.  Step away and see it from a new perspective.
2. Create implementation plans – in order for anything to happen, you must take the time to plan a strategy.  The execution will come automatically if you can plan it well.  This planning also should involve your team, since they’re the ones who will do the work.  By providing them with the ownership of activities, it will get done a lot faster.
3. Measure, Measure, Measure – you will not be able to fix what you cannot measure.  Measure the issues from beginning to end.  Most controllers and finance departments are experts at measuring loss.  That’s a great starting point.  Place measurement on the impact of changes as well.  You may need to employ some statistics, but the accurate measures will have a meaningful impact for your organization while creating a lasting legacy.
4. Enable systemic change – in order for success to be sustainable, innovations and change must occur on a systemic level.  This means that once you create the system of change, you can take a year long vacation and return to a successful company, and not an empty parking lot.  More importantly, your organization will have transformed to a new level that you barely recognize.  This is the stuff that makes magnificent legacies. 

In a nut shell, you are in complete control of your organization for the future.  All the various trends within organizations today are areas of concern.  Knowing these areas give you a great advantage, but only if you take action. 

We’ve compiled a quick questionnaire to help you determine the level of organizational health.

References:

Trends You Need to Know. (cover story) By: Colteryahn, Karen; Davis, Patty. T+D, Jan2004, Vol. 58 Issue 1, p28, 9p

What global executives think. (cover story) McKinsey Quarterly, 2004 Special Edition, p14, 9p

Schilling, M. A. & Steensma, H. K. (2001). The use of modular organizational forms: an industry-level analysis. Academy of Management Journal. 44, 1149-1168.

A Technology Vision. By: Friedman, Gregory H.. Journal of Financial Planning, Feb2002, Vol. 15 Issue 2, p40, 2p

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Last modified: July 30, 2006