Rumos Magazine - July / August 2015
By André Pimentel
As the consequences of this economic crisis unfold, I have been asked many questions about what companies should do to improve their performance at times like this. The central problem with this question is the clear contradiction between will or need and timing. I usually preach that the best moment to improve performance is when the company is in the ideal conditions to devote team effort and strategic focus, in addition to availability of capital, to seek to increase in a relevant and sustainable way its performance.
Despite the increasing maturity of Brazilian business leaders, unfortunately not everyone thinks so and ends up wasting the chance to be prepared for difficult cycles. Then, when these cycles appear, they attempt a late reaction so as not to be swept away by the current. As if in the midst of a strong pneumonia someone made the decision that this would be the right time to prepare to run a marathon.
Despite my severe pessimism about the remainder of 2015 and a significant portion of 2016, I believe that even with pneumonia, there are good management practices that can help any company minimize the effects of the crisis. I summarize four of them, all linked to the attitude. The first, and perhaps most important is: be optimistic, but do not take a second longer to adjust your operation simply believing that the situation will improve.
At the slightest sign of reduced sales, do not pile up stocks. Calibrate production or purchases (both resale products and raw materials) so as not to use working capital unnecessarily. Take group holidays, use the lay-off, reduce the number of shifts and hours worked. This not only reduces direct as well as indirect costs such as energy, water, food and transportation costs. The second action concerns the revision of the concepts of waste. That is, everything that does not make a big positive difference in times of crisis and does not contribute directly or indirectly to generate or to save cash.
Replace travel with videoconferences, book essential ones in advance (tickets and accommodation are cheaper), choose accommodations in the area of your appointments or near the airports, thus reducing travel expenses. Take a look at communications spending and contracts, as it is very common for a huge unnecessary liberality of the use of corporate telephones and lines. Review the contracts for maintenance, cleaning, food, transportation, health care, in order to adjust service levels to a crisis reality.
The third action is to ensure that everyone on the team is paddling to the same side, that is, away from the waterfall. Be transparent with your team; show them the difficulties, and compromise them with the quest for overcoming. People are the center of great transformations, but if you have any doubts, substitute immediately - think of the many that you may be putting at risk by keeping one that oars against, or simply does not oar. Be very clear with all the executives that the only way out is through true cooperation. Do not tolerate tolerate those who drag their feet or corporatism.
Everyone are, first and foremost, executives of the company, not only of their respective areas.
Lastly, the fourth action concerns the way you approach the market and your customers. If on the one hand there is no way to overcome a crisis without revenue, on the other the economic crises affect everyone, including their competitors. Therefore, focus on maintaining service levels and product quality so that customers have a better perception of cost / benefit compared to their competitors.