MGT1014 Tutorial 5 - Strategic Management.pptx

Strategic Management

1. STRATEGIC MANAGEMENT WEEK 6: TUTORIAL 5

2. Tutorial Question: You are a middle manager helping to implement a new corporate cost-cutting strategy, and you’re meeting skepticism, resistance, and, in some cases, outright hostility from your subordinates. In what ways might you or the company have been able to avoid this situation? Where do you go from here? Questions to Answer: How to avoid this situation? Where do you go from here?

3. Implementing a new strategy represents change, and change always involves the potential for loss of some kind, whether it’s loss of power, loss of relationships, loss of status, loss of security, or something else. People naturally resist loss. Lets discuss the way’s this could have been avoided

4. How to Avoid the Situation? 1. Monitored financial & environmental signals Depending on the exact circumstance, the need to switch to a corporate cost-cutting strategy may have been avoided had the company better monitored financials & recognized environmental signal.

5. How to Avoid the Situation? (cont..) 2. Stronger Relationships Such negative backlash from the employees may also have been  prevented had stronger relationships been formed between the  employees and upper management. In doing so, the employees may  be better aligned  and gain a better understanding of the necessary  company cuts

6. Where do you go from here? 1 . Credibility Is Key When employees are encouraged to take part in a cost-cutting initiative, it puts the credibility of the organization and its leaders and managers on the line. Employers that attempt to provide false reassurances to employees about the company’s financial health while simultaneously asking for their help in cost cutting will do more harm than good.

7. Where do you go from here? (cont..) 2. When and How to Engage Employees Timing can be everything, and waiting to involve employees can be a mistake. Let employees in on the need to cut costs at an early stage. Inviting feedback is one thing, and actually getting it is another.

8. Where do you go from here? (cont..) 3. Involving employees in cost-cutting measures: Explain why cost cutting is necessary.  You need to translate the business case for cost cutting into terms that are meaningful to all employees. Tell employees what’s in it for them.  Be explicit about the answer, and find out what’s meaningful to different individuals. - Reward employees who have come up with a good idea. - You also should be prepared to discuss with employees how their ideas fall short. Not every idea you receive is going to work

9. Where do you go from here? (cont..) c) Allow employees to be part of the decision process - By involving employees correctly in the cost- cutting process, employers can gain workers trust and reduce or even eliminate backlash to such decisions. - Employees might see opportunities that you might never see because they’re on the front line

10. Where do you go from here? (cont..) 4. Be Prepared for Opposition Regardless of your best intentions and your careful attention to communicating with and involving employees in your cost-cutting efforts, you are bound to ruffle a few feathers especially in today’s business climate.

11. Where do you go from here? (cont..) 4. Be Prepared for Opposition ( cont …) Not just employees, but some senior executives as well — will remain skeptical throughout the early stages of the process. They know that cost cutting means layoffs, and that these are devastating to both individuals and teams. Listening to employees also can help. Skillful listening helps relieve frustration and enables employees to be more productive. Value employees. The net result is better long-term performance .

12. Recommendation for the Future The feelings stirred up by an announcement of a cost-cutting action are powerful, and to help people see beyond them, you’ll need to enlist the help of your middle and frontline managers. It falls to them to communicate the rationale for the restructuring, to keep morale as high as possible during the transition. Employees need your support. Empower them to communicate and lead, not to just passively watch their departments lose their employees without a reason They can help their people understand the reasons for the particular choices that were made, and realize that the company, and by extension most employees, will ultimately be better off as a result. In so doing, these managers can earn their people’s trust by helping them see that becoming more efficient and effective is both a path for survival and a better way to operate.