Plan for prosperity, prepare for austerity

Posted on 20 Dec 2012 by The Manufacturer

Are our leaders up to it to the challenges of 2013? According to Festo Training and Consulting, the most essential leadership skills in 2013 will be the ability to recognise and implement change quickly. But Gary Wyles, managing director of Festo Training and Consulting questions whether our leaders are adequately skilled to deliver such flexibility.

Gary Wyles, Managing Director, Festo Training and Consulting

Deep breath everyone! With the New Year looming large many leaders will be using the Christmas break to think about the future direction and strategy for their businesses. Not that this is a relaxing break, or indeed a relaxing task, but stepping away from the operational side of an organisation, sometimes helps give a sense of perspective.

And a sense of perspective is exactly what’s needed. 2013 is likely to bring some challenges. Not that this is different; in fact it’s more realistic to say that constant change is the norm these days. But with change comes the real need to plan strategically. What’s different is that 2013 is likely to be the year of dual strategy.

It’s about planning for prosperity – but preparing for austerity. Early economic indicators show potential growth for manufacturing next year, but with a volatile position in Europe, we are all wondering whether growth is sustainable, or whether it will come at all.

Prosperity and austerity each bring their own challenges. In terms of austerity making cuts in the right place is tricky. Cut too deep and you won’t be able to recover quickly when you need to.

Equally, stripping an organisation back often requires investment in different areas. If you are taking people out, how are you going to enable the people left to still do their jobs? You might need to consider automation of processes, skilling people up to fill the void or use of more short-term contractors.

But, as manufacturing is more used to a fluctuating economy than most sectors, perhaps it is preparing for prosperity that presents the greatest challenge.

Invest too much in growth and you’ll just have to cut back later. Invest too little and your resources will be stretched meaning dissatisfied employees and customers who rightly expect better.

So leaders must ensure that the resources are in place (people, equipment etc.), to make the most of any growth, but at the same time give clear guidance on when, where and how to pull back if austerity bites again.

The exact tipping point of when austerity measures come into play needs to be highlighted. This can only be achieved through detailed strategic planning and a change management programme that engages the whole organisation.

The key is communication and clear leadership, and it seems that many business leaders struggle most in this area. A recent research from Festo, Manufacturing – A People Business, shows that 63% of organisations recognised a need to develop strategic skills amongst its leaders and only 32% felt that their leadership capabilities were adequate. 

This clearly shows a need for more training and development in leadership and in such an ambiguous market, the necessity for rapid change may highlight this need more acutely.

To be adequately prepared in 2013, leaders will need to:

  • Take time out of the business to strategise and delegate effectively in order to do so
  • Identify key business indicators that will direct the most appropriate plan to take
  • Drive change through prosperity and austerity
  • Engage with the organisation so that employees understand the business plan and rationale for change
  • Be open and honest about the state of play on a monthly or weekly basis
  • Recognise areas of pain within an organisation and address accordingly
  • Coach and mentor a pipeline of future leaders to help drive through organisational change

So while we absolutely need to ride a wave of growth, we should remain cautious. Not getting it right will cause additional pain for any organisation. Managing change can test even our most talented leaders to the limit, so organisations must ensure that leaders are equipped with the necessary skills to guide them through both austerity and hopefully growth.