The importance of morale

To achieve success all organisations must have effective leadership. It is the quality of this leadership which determines the morale of the company.

 

Management has the responsibility to lay down a set of ideas and objectives that are articulated, understood and supported by the workforce. Good people do not like working for organisations whose values are muddled.

 

A clear and defined vision are essential requirements. Managing a company, and dealing swiftly with a variety of challenges and issues is a complex task.

 

Letting your employees express their feelings, needs and concerns will make them feel appreciated. The most efficient companies are those where the workforce feel an integral part of the set-up and not merely there to make up the numbers.

 

The workforce is the company’s most precious asset. Accordingly the ability to judge people and value their contribution is an essential prerequisite for any manager. Show appreciation of a job well done, admiration will boost your employees morale.

 

It is important to recognise a job “well done” and that employees know that their contribution has value.

 

Create a positive working environment – if an employee doesn’t feel comfortable or motivated by their surroundings, morale will plummet. It’s important that you create an environment that employees will want to work in and will thrive in.

 

Building a talented team requires working with people who may be better at their job than you are at yours, and to guide and motivate them.

 

People will always derive more benefit from a good mentor than from any course or training exercise.

 

A false sense of well being

 

Until such times that they are directly faced with a problem it is the nature of most companies to assume that all is well with their systems and operating procedures.

 

These are the companies that are most likely to be blindsided.

 

Constant monitoring of counter party risk is the order of the day combined with disciplined inventory control.

A customer’s previous reliability can provide a false sense of comfort. Past performance is unfortunately not a failsafe guarantee for the future. Be alive to tell-tale signs such as unusual ordering patterns, delays in payments etc.

 

In truth very few businesses fail overnight and there are usually enough warning signals which should enable a vigilant supplier to reduce its risk.

Current market conditions will continue to test but undoubtedly there will also be opportunities for those placed to take advantage of less efficiently organised companies.

 

By far the biggest danger to the financial wellbeing of any organisation is complacency.

 

Holding a tiger by the tail

Many companies find themselves with the dilemma of diminishing revenue returns and a tired business model which is either irrelevant or obsolete.

Diversification is seen as the solution to this dilemma. However diversification is one of the most difficult challenges facing any business, and the mechanism for achieving this objective can be particularly difficult to implement.

The first step is examining why the current business model is not working.

 

This requires an honest appraisal from the management in respect of their performance.

 

Then the areas of diversification have to be closely considered, many times people plunge into businesses in which they have little knowledge or experience and the results pretty quickly show up these deficiencies.

Thirdly one should always respect geography it may be very tempting to consider that there are opportunities just waiting to be picked up but to underestimate the advantage of local knowledge and conditions can again prove costly.

In essence diversification can provide the answer to a company’s need for increased revenue but without a clearly defined strategy it can equally provide another drain on an already embattled balance sheet.

 

Setting the course

 

When attempting to boost the bottom line there are two courses of action, reduce operating costs and generate additional revenue.

The first action that many organisations take is to reduce staffing numbers, seeing this as a quick fix. This has been the first action taken by the supermarkets and retail chains as they face competition from online suppliers.

 

It is a tool by which management perceive they can demonstrate that they are getting to grips with the problem.

 

However, there is a danger that in line with reduced personnel there is an accompanying decline in operating standards. In such circumstances customers often choose to vote with their feet.

For the sales director there is only one shot in his/her armoury namely increase sales. Sales targets can always be raised but a sense of commercial realism also needs to be applied.

If the company is marketing a totally unique product or service the task is easier but for the most part there are many organisations are offering a similar range of products in a broadly similar price range.

In many instances companies would be advised to make customer service their USP but this requires the commitment of a dedicated work force not one that is pre-occupied with the spectre of further redundancies.

 

 

Speak softly and carry a big stick

 

Funding issues continue to impact on businesses with more and more customers actively employing various tactics to delay payment to suppliers.

 

Credit control and the monitoring of payments is an increasingly important element for every business.

 

By exceeding the agreed payment terms a customer is using the supplier as an alternate (unsecured overdraft).

 

This situation if left unchecked can spiral out of control. As the situation deteriorates the supplier can find themselves in the invidious position whereby they are forced to keep “trading” with the errant customer for fear of realising a bad debt.

 

Think of the parallel to the Euro zone bail out situations – it is a slippery path.

 

Slack policing of accounts receivable will have serious consequences. At best tardy payments damage cash-flow and at worst can often be the precursor of a company failing with the end result of a total write off.

 

An examination of most debtor’s lists will undoubtedly provide examples of aged invoices where 30 day terms have drifted into 60 and beyond.

 

Consider the damage that is being done to your company’s financial position and ask the question “why is this being allowed to happen?”.

 

A timely exercise

As business practices change and external factors come into play a regular review of the company’s business plan will ensure that the company stays ahead of the game.

 

The review if done correctly should produce a realistic, objective and clinical appraisal of the business.

 

Following an analysis of the business plan it should be easier to communicate objectives and strategies to those funding the operation and also to the company’s employees.

 

The review will serve as a reference point when determining the effects of alternative courses of action on business operations.

 

A clear assessment of current working practices should highlight areas where the company may require outside assistance.

 

At the same time an analysis of the current inventory levels and receivables will provide the answer to the future growth and capital requirements of the business.

 

 

Where’s the family silver?

It is incomprehensible that so many companies be they large or small fail to keep an adequate control of their stock holdings.

 

Similarly companies neglect to rigorously police their receivables.

 

Whilst management consistently focus and push for increased sales performance in their pursuit of turnover/ market share, the question of housekeeping is often put on the back burner or it would appear totally neglected.

 

It is a truism that no business deal is complete until the invoiced funds are in the seller’s bank account.

 

This begs the question: how comfortable are you with your stock and debtors controls?

 

A worthwhile exercise would be to review operating systems now rather than adopt the “let’s hope for the best” style of management.