Old Management Styles That No Longer Work
If a person has attained some measure of accomplishment in business, it is only natural for him to believe that he has done the right things. Furthermore, the greater his success, the stronger is his faith in his tried and tested methods. People who wish to improve the system will have extreme difficulty making changes if they are up against the deeply held beliefs of the founder himself.
In fairness to old management, it is quite likely that many things have been done right. Very likely, he has been hardworking, thrifty and persistent. There are indeed qualities that never go out of style and nobody can argue that they were instrumental for making the company strong.
The problem is that there are aspects that must be changed as they are no longer the right solutions. There are numerous old management styles that must be changed; among the most common are the following:
Managing like a dictator. There was a time when you can simply bark out your orders and then employees would obey without complaint. Rarely do the employers then ask for suggestions from subordinates. The manner of giving orders is disrespectful. Nowadays, in most settings, this style of management is unlikely to succeed, especially if you are handling professionals or higher level employees. Either there would be severe demoralization or the employee may soon seek more respectful environments.
Ignoring true computerization. While almost every business uses computers, much of the potential productivity gains are not realized because few, except for large companies, have computerized their core operations or even make the most use of their current standard MS Office software. One of the results is poor productivity. A symptom of this is made apparent when looking for needed information—it may take hours instead of seconds if the information is already in a computerized database.
Failing to market effectively on the Internet. In the first place, there are many companies that still do not have a website. Even those with websites often have the wrong content and make no effort attracting people to visit their site. Plenty of old-timers believe that it is an unnecessary expense and that their past ways of marketing is sufficient for their needs. However, a large and rapidly growing part of the population now use the Internet as their primary source of information. Ignoring this market severely limits the company’s sales potential.
Competing only on price. Many entrepreneurs in the past have grown their business by focusing solely on offering low prices. While low prices are a powerful marketing tool, there are other qualities that customers want and are willing to pay for the value added. Also, people tend to associate low price with low quality, and this is an image that is hard to erase even if your product is, in fact, better than the higher priced competition.
Offering insufficient compensation for key personnel. Skilled personnel are getting harder to find. There are now more opportunities for those with certain types of competence like Accounting. If you do not offer competitive salaries, you will find it difficult to hire and retain needed people. Study the total compensation package of other companies and see how it compares to what you are giving.
Ignoring international developments. Knowing about developments abroad that may affect your business is becoming more and more important as our economies become more interdependent. This is most critical if you are about to make decisions that entail long-term commitment because by the time you feel the effects of the relevant event abroad, it may already be costly to make changes. For example, if there is political instability in oil producing countries, you may expect the prices of local oil-dependent products to increase. This may trigger substantial increases in other commodities and leave people with less disposable income, hence reducing demand for your products. If you are on the verge of deciding on investing in new production facilities, you will have to factor in the effects of events happening abroad. Lately, one of the most talked about topic by business reporters is the possibility of a U.S. default. Although this is considered very unlikely by most experts on the subject, if it happens, the damage to the world economy may be very serious.
Relying on gut feel rather than making scientific studies. The ability to make decisions rapidly is truly a strong point, but there are situations that require scientific study. Among the most frequently disregarded is the making of a proper marketing research before investing on a business. The time and expenses saved in foregoing the marketing research is far outweighed by the risk of losing your investment.
Not adapting to changes in customer preferences. One of the most dangerous things to do is simply to not change when your market has evolved and drifted towards your competitors’ offerings. An example of this is the shift in the qualities people are looking for when buying personal computers. At first, people considered only the technical strengths of computers; later on, design and aesthetics played a large role in their buying decision. The manufacturers that did not adapt lost market share to those who perceived the change earlier.
The people that have built thriving companies have indeed done something to be proud of. Nobody else is more desirous of continuing the growth of their creation. The same is true of veteran managers who cling to the old ways. It should be with the utmost respect and humility that those who wish to implement major changes attempt to gently persuade their seniors.
*Originally published by the Manila Bulletin. D-6, Sunday, October 20, 2013. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.