CEO

Management and the fear of change

The fear of change is a natural human behavior, as human, we are always afraid of the unknown. Managers and CEOs may face stiff resistance from the stockholders of the company for their “change management” plans.

In the recent months, I have the opportunity to work for two different companies where my main job duty was to implement a strategy to for a change inside these companies to make them more profitable, reduce costs and enhance the image of the companies.

It’s very easy for stockholders to ask for a change, but it’s hard for them to accept it. Most decision-makers are not willing to change the way things are, they are not willing to let go of their power or authority. When the stockholders or the decision-makers call for change inside the company, they want this change to happen without them losing their current positions.

This fear of change doesn’t not only apply to management and companies, but also to nations and people in general. In my trip to several developing countries in the last few months, I have seen first hand how globalization and the wave of change that is hitting many countries around the world is creating fear in the mind of the public.

Many developing countries want to benefit from the wave of globalization and want to offer its citizens better living conditions, but with that, there is a strong resistance to change by the same people who are calling for a change.

So if you are dealing with change management at your organization, you will face a resistance to change, don’t let that discourage you, just be patient and introduce the changes slowly.

Pay to get the best employees

One of the greatest challenges that face small businesses and sometimes even the larger corporate world is unskilled or under qualified labor force.

I have worked and visited few countries in the past 12 months from the US to India to Saudi Arabia to Qatar. As a young graduate, I started my career with a small company in TX, USA, most of the labor force of that company consisted of young graduates with very limited experience. The company strategy was, as most small businesses do, is to hire young workers or workers with limited experience to cut costs. The end results were disastrous, the company was not able to carry on with its obligations, many deliverables didn’t meet client expectations and most projects ran over budget and the end result was “a bankrupted company.”

What made me write about this subject is my current experience. Right now I am working in the Area between Saudi Arabia, Dubai and Qatar, this area known locally by “The Arabian Gulf.” Because of the rising oil prices, governments here are spending billions of dollars in all areas of developments, which is great, but most projects depends heavily on cheap labor brought in from South Asia. As I live in this area, I see why the development over the past 20-30 years has been slow although billions of dollars were spent on thousands of projects, the main reason for that is the total dependency on cheap labor, most projects were not executed properly because of lake of experience, many projects were done over and over.

The management tip here is “don’t really on cheap labor; it will cost you down the road.”

Carlos Ghosn and the philosophy of change at Nissan Motor

Many people may have not heard of Carlos Ghosn Nissan’s CEO, this Brazilian born for Lebanese parents turned Nissan around and made it profitable again. There is so much a person can learn from Mr. Ghosn management style but one thing that really got my attention and I am personally a firm believer in it is his idea of “Respect the other party culture, but never to be forced on you.”

In order for Mr. Ghosn to turn Nissan Motor around, he had to break many traditional practices at Nissan Motor that has strong link to the Japanese culture; this made him the most hated man in Japan, but also one of the most successful CEOs.

I always believed that success has no boundaries nor it is a property of a certain culture, successful methods of management can be applied in any culture and in any country.

I always like to take MacDonald as an example of successful company who assimilates well in its local environment without losing its corporate identity and value system.

Smart management not cheap management

As business managers, we all care about reducing costs and maximizing profit, we look for ways to acquire assets at the lowest possible cost. One of my clients who I do consulting work for have the habit of buying used supplies including computers. He gives me a lot of work trying to fix his network that runs on old used computers. I asked him many times why he keeps buying old computers while by spending few hundreds extra dollars he can get himself new computers? He said “I run an insurance company and most of the time my staff uses the computers only to fill forms online, I don’t need new computers with extra features that I will never use.”

I understand his reasoning, but I also understand that old machines will keep breaking and his maintenance bill will keep going up.

This client has many offices that I do network and computer maintenance work for, so one day I told him “lets start buying new computers for one of your offices and see how this will reduce your maintenance cost”, he agreed and we got new computers for that particular office, and the results amazed him, his maintenance and network support calls for that office went to almost zero, and he was able to recover the cost of the new computers from the saving he made by not losing work hours due to network down time and not having to pay for network troubleshooting.

At my current consulting job, we have the same problem, some off brand computers that breaks every few days and not reliable web hosting company for our e-mail services. Now again, I am starting to clean up this company and show the management how they can save by investing in good equipment and reliable services, even if the cost is bit high, but it will pay-off later.

Rising Oil prices and cost management

The continues hike in oil prices is not going to stop anytime soon, if your business is directly affected by oil price fluctuations, it would be a wise decision to plan your budget around higher oil prices.

Many businesses, especially small businesses, may psychologically, get affected by hearing the news of higher oil prices and start to worry about their bottom line.

But as a business you got to look at your numbers. As a consultant who uses the internet and the phones extensively in his work, I saw a sharp decline in my communications bill, from almost $1000 a month to below $100 a month, that’s 90% decrease in cost.

This is only one example of how costs are dropping for other services. Having your employees work remotely from home is another example of cost saving method you can utilize, by having your employees work from home, you can cut on many types of costs associated with the office environment such as (office rent, utilities bills, commuting time, etc.)

The costs of few commodities may be rising, but the overall cost of doing business is dropping.

Pro labor or Pro Management

Where should the manager stand when there is a conflict between employees and management? Last week at my work, there was a conflict between upper management and the accounting department. The accounting department approved a large cash withdrawal form the company’s bank account for some immediate payments including staff salaries (we are dealing with a small business here, so some of the payments are usually paid in cash.) The CEO of the company was in total disbelieve on how the accounting department approved such a large payment without his approval.

I was in a unique situation, the CEO is not usually around and the accounting department needed the fund but at the same time the CEO instructed the accounting department not to authorize any large payments without his approval.

The accounting department saved the day by withdrawing the money and making payments, but it also violated the CEO policy. I thought parties were to blame, the CEO was not around to approve an urgent money withdrawal and the accounting department didn’t not follow the standard procedures to withdraw funds.

In my meeting with the CEO and the accounting department, I maintained my neutrality, I had to make sure I don’t lose the confidence of either party, upper management must be sure that I will do my best to protect the interest of the company and the staff members must be sure that I will support them in a time of a conflict.