As sales activity recedes, overheads and expenses exceed revenues and you begin to fear for the future of the business what corrective action will you take and will it prove to be right? Whilst your business has been successful and profitable it will be because of the critical balance between the operating dynamics and the human resources. If you change those dynamics and resources the balance will be disturbed and, as everyone knows, when you change one part of a machine the remaining parts start to give out, as well. Cash is King but..... don't fall into the trap of believing that cutting costs will save the business. It won't if in doing so you cut the lifeblood from the business. Advice from your accountant is essential but remember, your accountant is not a surrogate non-executive director or business management guru unless actually engaged for that role. Mostly they are not. If you are going to make change you should consider the impact from three points of view: Financial, Human Resources and Risk - the unintended consequences of change are what can bring you down.
The Critical Lifeline
More than 75% of things that go wrong in a company originate from a breakdown in communication. Effective communication is the company's umbilical cord. Cut it and the business will quickly suffer and may die. It is only possible to maintain effective communication if the company has the right training and resources to allow communication to flow. That is a skilled art and well worth paying for.
What is communication?
In the context of a business operation it is:- the means by which people interface with each other, apply their joint and several skills and competencies and their relationships with outside parties including clients, contractors, suppliers, regulators, consultants, advisers and any other parties who could have an influence upon the conduct of your business.
What are the typical break downs in communication?
Mis-Trust; Wrong assumptions; Careless recording of messages; Hostility between communicating parties; Language differences; Silo mentality- are just some of the examples. Every business has its own communication peculiarities and they should be well known by senior management and regularly tested for "faults in the line".
What really matters is the measures that can be taken to reinforce effective communication. Human resource dynamics can be influenced by competent and skilled peer group protocols that not only remove much of the risk of breakdown but positively improve the client and third party awareness of your quality of service.
Effective management of risk is not about insurance : it is all about understanding what can harm you and how you can prevent it. Trafalgar's Consultants can help. Do not hesitate to contact us for an initial no obligation chat.
Article By Roger Flaxman, ACII MAE