THERE is never a time when leadership does not have its challenges, and this is particularly so during periods of economic upheavals and great uncertainty. Chief executive officers have a heavy duty to ensure that their organisations are able to withstand a potentially long-drawn downturn.
Companies with limited funds will be more pressured to improve their efficiency. Companies that have deep reserves and stand to make great gains from potential mergers and acquisitions, will also want to step up their internal resilience so as to reap the maximum benefits from any such exercises. CEOs are not expected to make perfect decisions all the time but to demonstrate the qualities of stewardship in an increasingly tough environment. The worldwide credit crunch has put additional pressure on them to come up with sustainable measures for survival. Simply put, this crisis will sieve out the men from the boys.
It is a tough call but in the current environment, CEOs should show their leadership in being able to pick out and really reward those who can soldier on. The CEO should use this period of general inactivity to shape up his organisation so that it is prepared for the upturn. It should not only be in terms of cashflow and reserves when companies are planning for up or down cycles; the human capital aspect also needs to be closely scrutinised. In such a challenging environment, the popular option would be to hire and fire so that only the best would be retained.
However, companies that are far-sighted would look after their staff and prepare for better days ahead. It is during hard times that companies call for greater accountability. During good times, a lot of fat and wastage are accumulated; all these need to be shed now. Leaders who have been very strict even during good times stand to reap the fruits of their labour. Come bad times, they and those under them do not suffer so much as a lot of good business practices had been inbuilt into the system already.
Recent experience in developed countries has shown that a lackadaisical attitude combined with an idealistic approach towards free markets are sure recipes for disaster. It is hard to be strict and popular; good leaders will strive for results while enlisting support from all quarters.
The foundation is usually built during good times as leaders with good foresight will always plan ahead for the downcycle. For those who have missed the boat and find themselves largely confronted with a team of boys, it is not too late to shape up. There is no knowing how long this downturn can last; many believe it will get worse before it gets better.
Ultimately, it is always the team that matters, their spirit and dedication is the thing that will make it or break it. A good leader is always cognisant of that.
Senior business editor Yap Leng Kuen believes that CEOs should have the courage to institute change.
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