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Recession has arrived in the US and Europe. Corporate buzz is that in India, also, recession has set in and we could see the slowdown of the economy. But there is another school of thought that says that because the Indian economy is so large with a wide consumer base, supplemented by adequate agricultural and industrial production, India is insulated. Without getting into the debate of divergent views, we should settle down to the fact that if we do not prepare now for facing the worst situation, we will soon become victim of the same.
When we try to differentiate India from other countries, what will make us stand apart is our unique diversity, culture, tradition, size and unparallel advancements that we are making in telecom/IT sectors. We can also reap the benefits of demographic dividend as also a sizeable number of the population who can speak English. Now, taking the same logic to the next level of correlation, can we harbour such thoughts and factors, that we can say will be our strength in defining our organisational culture prevailing in Indian companies? Surely, the hesitation in answering, will lead us to the inference that we have to go a long way in improving the organisational culture. If we decide to do that, then there cannot be a better time than now. The best example to cite could be Japanese business, where both national culture and organisational culture have contributed to the economic growth.
Organisational Culture Impacts Performance
It’s a fact that organisational culture plays a key role in organisational effectiveness, which in turn impacts the organisational performance. And while saying so, we have to remind ourselves that the role of organisation culture will be a dominant factor, irrespective of the growth phases of the organisation. Hence, it becomes very critical, especially when passing through an economic recession. However, there are some unique characteristics attached to organisational dimension, which make problem solving more difficult, even though identifying the problem and defining it is being done correctly. This necessitates a new culture alignment to enable the organisation function effectively even during recession.
Since organisational culture affects every aspect of an organisation, we will try limiting our probe only to the following areas:
• What constitutes organisation culture;
• How it can be influenced;
• What is recession;
• What are all the strategies to manage recessionary effects on the organisation; and,
• How effectively organisational culture can be engineered to support the strategies to build high performance organisations?
Till the 1980s, organisational culture was virtually neglected in India as it was considered a niche segment to delve into. The importance of organisational culture then started growing over the years; but even today, the status is only relatively better as it is yet to be understood rightly. To start with, let’s examine what constitutes organisational culture. “The way we do things here” is the simpler and generic definition in usage. People perceive that culture as something what the organisation has and something what the organisation really is. Probably, if we draw a parallel to the concept of knowledge then it will be akin to what you know and also what you do not know. In that case Organisational Culture might as well include something what the organisation does not have and something what the organisation is not.
However, the most comprehensive definition should include both the outcome and the process. Both are important as an end and means. In theory, everybody talks about organisational culture, whereas in practice, it is seen as intangible, undefined and disconnected. Gone are the days when organisations did not realize the importance and hence did not attempt to measure, manage or develop, for the simplest reason that it cannot be touched and felt.
The word culture refers mainly to something tacit, unspoken and unconscious. A lot of work has gone into this area, especially in the last and the present decade. If we study the status of organisational culture in different organisations, we will realize that Culture is real; Culture is pervasive; Culture makes a difference; Culture is multifaceted. That is why it was always comprehensively said what organisational culture will relate to?
There are a lot of definitions one could refer to, but one which is more comprehensive is that “Corporate culture is the collective belief system that people within a company have about their ability to compete in the market place and how they act on those belief systems to bring value-added services and products to customers and profits to the company”. Even though, culture is mostly invisible to the marketplace, it is quite transparent to customers and investors, due to the constant interaction of the collective belief systems. The world over, organisations’ approach towards culture has undergone a lot of transformation, arguably due to the direct benefits it brings in. Let’s now examine the influence of strong organisational culture on business.
Organisational Culture Influences Business
In the beginning, organisations were relatively smaller, and simpler; however, today, organisations have grown in size as well as in complexity, making the management of organisational culture more challenging and crucial. Organisational culture gives an organisational identity to employees. It also helps in building stability and continuity to the organisation as well as security to the employees. Awareness about the culture helps employees in interpreting what goes on inside the organisation and helps in clarifying events. Precisely for this reason, a strong culture stimulates employee enthusiasm and builds up team cohesiveness.
If we look at organisations from a different perspective, we will realize that the importance of organisations lies in the fact that they enable people to achieve what cannot be efficiently achieved by individuals working on their own. Towards this, the essence of organisation depends upon, how well the organisational culture blends different teams in an organisation. Accordingly, the strength of the culture in turn, depends on how widely it is shared across the organisation. In organisations where values and norms are widely shared and strongly held, there is greater probability of having a vibrant culture and a better performing organisation than the rest.
An organisation is not an assortment of different departments or units. It has characteris-tics, processes, systems, identity and cohesion. Culture helps in understanding different dimensions and dilemmas of the organisation. Therefore, the success and effectiveness of an organisation are deeply rooted and inter-linked to organisational culture. In short, we can say organisational culture helps us to face the challenges of integration. How long we would rely on explicit contracts and procedures, rather than relying on shared values and understandings within the organisation.
While organisational culture is very important for the future of the organisation, the complexity arises from the fact that it is not simple to alter as is being approached. In simple sense, it is influenced by what we try to do a task, how we accomplish it through deploying the right technology, systems and procedures and how well we align the organisation with market strategy and to what scale we are trying to do that. When all the attributes of culture react with various other factors of organisation, it gives birth to organisational dynamics. This chemistry plays a major role in readying the organisation for future changes that it must undergo.
Having elaborated the attributes of organisation and organisational culture, let’s define the word ‘recession’. Recession on a corollary note can be compared to the ‘Tides in the Ocean’; when the tide recedes, it results in exposing the proverbial waterline. Research conducted so far, indicates that recession occurs in a convincing recurring pattern. Due to this very reason only, organisational culture needs to be honed continuously on a long run for eventual downturns, which are waiting to happen. Of course, when we work on organisational culture with this long-term perspective, it will enhance the advantages of the organisation, when the going is good.
Strategies Adopted During Recession
Focussing on organisational culture is one of the established tactics in avoiding being the victim of low economic phases. Before going into the nuances of how organisational culture supports the business strategies during recession, let us deal with the time tested business strategies adopted during recession.
Very often, organisations get confused on whether survival is the aim ‘or’ success. During recession, high performing organisations try to succeed and the rest struggle to survive. Just like one can see an opportunity in a problem, recession also gives rise to disguised opportunities. From history we can infer that great changes in the business environment are born out of crisis, during bad times, rather than during good times which is more often predictive. There are evidences that stronger organisations use ‘recession’ to acquire the weaker competitors. It is better not to get discouraged with fears of recession but to leverage the opportunity available in a conditional environment for the betterment of the organisation.
There is a saying that “When economy gets cold, the culture gets pneumonia.” Experts in the field have suggested some basic steps to manage during Recession:
• Reactivating dormant accounts/old leads;
• Helping existing clients create new assignments;
• Quoting reasonable and affordable prices;
• Using low cost add-ons to generate additional revenues;
• Postpone any planned fee increases;
• Bringing flexibility in choosing the customer profile;
• Repackaging the offerings to accommodate smaller clients; and,
• Putting in place aggressive marketing plans.
During recession, focussing on immediate survival could be termed as short-term, while equally complementing mid-term and long-term success. For example, during survival, McDonald introduced low price-point coffee options which were on a differential note. This mode requires quick and decisive action. Retention of existing customers becomes important during this phase. The very subsequent step could require continuous improvement for taking the customer to the next level. With enhancement of technology/process, by optimization of resources and implementing new ideas, we need to re-align our strategy to manage recessionary phases.
These are all time-tested business methodologies which are nothing but seeking new ways to improve the defined performance parameters. Equally important are people related issues and the connected leadership effectiveness.
When people pick up the reasons for organisational success namely technology, business acumen, visionary approach, active leadership etc, what they mean is that the most important asset of any organisation that is ‘people dimension’ and it is wise to leverage human capital. It is obvious that the value of the human capital is not the cost of technology or the cost of knowledgeable people but the potential of human resources in terms of what ‘value add’ they can bring in. That is why ‘human capital’ can act as a catalyst to grow business much faster than the other fundamental text book capitals.
When business managers prepare the organisation to face recession, it is left to the captain of the ship and the HR to clarify to the apprehensions of the people about the future of the organisation. Their task will be easy, if the organisation is already equipped with a transparent as well as assertive culture. Both freedom of expression and freedom after expression are important. This will positively impact the employees in terms of what they think, assert, own and take full responsibility for. Hence, we should do all that is practical to reassure that the organisation is conscious of the bad news, but fully geared up to meet eventualities. If this communication to bring in awareness is clear in any organisation, down the line, the courage and conviction to win over recession will follow and will be well supported.
We also need to train the members of the organisation to refuse to be a victim of recession. If the employees are influenced to leave nothing to chance but to choice, they will become more conscious and aware of reality by driving away the fear of unknown. The need of the hour is to use short term tactics like the ‘Guerrilla Marketing’ technique which is nothing but the most economic and effective way of marketing. Signing a big contract, at a cost with small margin, may not be a bad idea during a recessionary phase. But people need to be clarified, why such steps are being taken and what is the time frame set to review this particular strategy.
Creating an Employee Friendly Organisation
The world over High Performance Organisations mostly resort to the people related action plan by creating an employee friendly environment to accomplish the following:
• Employees are trained to get used to compete with each other and hence they stand a better chance of succeeding against the external world, especially during Recession;
• Employees are encouraged to take challenging goals so that they do not like clearly defined goals but want the organisation to only define Vision, leaving the goals to the individuals;
• High Performance Culture is more visible and hence the growth is always better than the rest of the market, which is ideal during recession; and,
• Employees should be convinced that delivering during Recession is the real test of competency and recession is an opportunity for the high potential employees to test their competencies vis-à-vis others.
It is deliberate that the usual cost-cutting measures adopted by an organisation was not discussed, as any organisation will run-up to an action plan that will include ‘right sizing, compensation realignment, closing down of sub units, travel restrictions, training slowdown’ etc. However, it is always prudent to allow the employees to define the best and apt way for saving cost, by way of minimising the waste, improving process efficiency, increasing the turnaround frequency, and by doing things differently.
Here the managers’ job simply rests with making the employees realize that there is scope for cost reduction. Employees are always in a better position to identify and plug the income leakage, as they are closer to action points. Austerity measures introduced by various organisations have ended up as laughing stock, because they are penny wise and pound foolish. But strong assertive culture would enable the employees to suggest, own and implement cost cutting measures, which can be positively and immediately responded to by the management with rewards commensurate to the savings implemented. This would give an impression that the management mean exactly what they discussed in the Town Hall Meeting.
Linking Business Process with HR Process
If we have to get into a deeper study in the given area as to how organisational culture will support the recession management strategies, we need to link the business process with the HR process. In a performance driven organisation the following attributes could be leveraged to support the Recession Management Plans:
• Transparent work culture;
• Effective communication of Strategies/Action plan;
• High Risk propensity in the Organisation;
• Faster decision-making process;
• Building the competitive advantage through innovation and better knowledge management, and,
• Adopting proactive marketing techniques.
One would agree that all these are strongly related to ‘People’ in some form or another. The willingness and readiness with which people tackle the recessionary challenges, will determine how fast the organisation can shift gears from survival to success. During recession, improving the flexibility of the organisation is of paramount importance, as it helps in optimum deployment of resources, ensuring effective leadership role(s) and refreshing the strategic ability.
What will constitute as key success factor in building a healthy organisation culture will largely depend on various business-related factors like region, market, industry, competition, government policies, etc. But it is the role of active leadership to decide, convey and clarify to the entire organisation as to what is the need of the hour.
Even the most fortunate of organisations run out of luck during recession and get exposed, due to lack of a systematic approach in the decision making process. Here, the senior management members should realize that the decision making process can be democratic, but decision making is autocratic. It is a trade-off between inputs and time, and hence it should be quick with higher probability of being right. Normally, delay and indecisiveness happen, because the authority structure is not clarified or risk propensity of managers are very low, or it could be the top management is not challenging enough or complacency could have set in the organisation, and the usual words doing round could be “that the organisation has already seen such worse situations earlier, hence it will survive and sail through this time also.” But in reality, it may not.
It is interesting to note that all that we have discussed so far, as cultural pillars during recession, are equally applicable during normal times as well. But what we should realize is that during recession, you don’t have an option – to choose or reject, as the gravity is high and time available for correction is short. John P Kotter in his book ‘A Sense of Urgency’ suggests that we should focus on few ideas which can be implemented for quick results rather than getting lost in linear thinking about a long list of ideas. He also suggests ‘bringing the outside in’, ‘behaving with urgency every day’ and firmly dealing with negativism for immediate results. In all, a sense of urgency should prevail throughout the organisation. Let us realize that the strength of the organisational culture does not lie in the policy document, but in the minds and hearts of organisational members. With this head and heart strategy, let us hope that we will be through.
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