Chaos Needs a Plan

BY BRIAN PORTER

One year into the COVID-19 pandemic, there have been positives and negatives, but managers still need to plan for continued uncertainty.

So, here we are, about one year after a “limited” global shutdown caused governments around the world to close borders, companies to consider their risk profiles, and the Tokyo 2020 games to be shifted to the Tokyo 2021 games. At the time of this writing, the games are still planned for this coming summer.

Let’s consider some of the major changes that have come about in everyday life because of COVID-19 responses:

• Masks required in many or most public places

• Physical distancing recommendations outside the home

• Limited number of people at gatherings

• Videoconferences rather than “in-person” now the norm

• Reduced travel for business and personal purposes

• Less time with extended families

• Delayed weddings, funerals, and other special events

• Soaring and then dropping unemployment, which remains above historic lows

• Significant decline in math and reading skills for children • Mandated curfews in some cities

• Significantly increased domestic violence numbers

• Increase in suicidal thoughts, especially in younger generations

It’s not all bad, though. We have also seen several beneficial aspects to the 2020 isolation period:

• Less business travel, which is good for the individual and families but not for airlines

• Lower fuel prices for those who do have to travel

• Increased focus on health and exercise for some

• Increase in baking, which is good for those who like eating!

When the pandemic restrictions first hit the workplace about a year ago, a general feeling of helplessness seemed to permeate just about every person. The chaos of disrupted business required a varied approach to doing jobs, including WFH (work from home), alternating schedules, and modification of normal processes. So many individuals, employees, and managers took the initial two-week shutdown as a vacation rather than a way to consider risk and improve ways of getting things done.

However, some of the best managers and executives saw an opportunity to modify and thrive, rather than sit back and wait. The rest were confused and didn’t have a clue how to move forward. You may have determined who you were in spring 2020. More important, it’s up to you to decide who you will be during spring 2021 and moving forward. How will you address the unknown in the future?

PROJECT MANAGEMENT TOOLS CAN HELP
“Plans are worthless, but planning is everything.”
—General Dwight D. Eisenhower

Organizations, whether for-profit, nonprofit, or government, just need to plan. There may be those who are on one side or the other of the “predictive” or “agile” argument. Neither approach is correct by itself, especially in a time of chaos. It takes a balance of short-term responses and long-term adjustments, which will require both agile and predictive methods to assess and respond with better results.

Just to be clear, here’s an analogy for understanding how the two methods would be used when taking a trip from New York to California:

• If a 100% predictive method is used, the project manager will focus on details from the very start to the very finish using the IPEMC (initiating, planning, executing, monitoring and controlling, and closing) process groups. They will outline each turn and every stop and calculate estimated fuel efficiency for the entire journey.

• If a 100% agile method is used, the team will only consider the direction they are heading and estimate how far they might travel in a day. Each morning, the team will consider what the plan for the day should be. To this team, an agile daily stand-up meeting includes yesterday’s accomplishments, goals for today, and the challenges blocking these goals.

Both methods require planning, but one assumes a known end and that all details can be calculated. The other addresses the short term with more flexibility.

Let’s use both methods and address this the AMA way!

• Analyze the situation

• Make a plan

• Adapt as needed

ANALYZE THE SITUATION—DON’T FLINCH!

All too often, managers flinch at sudden changes in the market, employee resignations or, in 2020, a pandemic. Those that “flinched” canceled life for two weeks and then came back without a plan. Instead, when faced with a business or personal situation that causes great change, you should pause and consider the situation. Observe all ways the organization, employees, and you as an individual will be affected.

I recall a disaster movie where people saw a meteor coming at them and started to panic, shouting and running in every direction. One “leader” got on a megaphone and yelled “Stop,” causing everyone to look at him. He shouted, “Look where it’s heading!” After a moment they all noted the direction and ran to the side, avoiding running into the peril. They stopped for a moment and decided how to respond.

When chaos or disaster strikes business, you may need to tell yourself “Stop” for a moment and figure out where things are heading, instead of responding by panicking. Consider all the elements that need to be addressed:

• Policy. Consider newly instituted local, state, and federal restrictions. How might some of these restrictions threaten business, but also open opportunities?

• Product. There will be changes in demand for products or services provided by the organization. This could mean a significant drop or a significant increase. Perhaps a portion of the organization will see a drop and the other portion will see a gain.

• Process. There are external forces that can invalidate your current processes. Perhaps you have performed business only in a face-to-face modality for years, but now you have changed to digital or physical delivery. What other factors might force change to your existing processes?

• People. Your employees will have fears and concerns. Unemployment is a big concern, but for others during the 2020 pandemic, the fear was not of losing their job but determining how to do the job effectively with children studying at home.

Sometimes, a proposed change itself is enough to cause panic and fear. Judging the level of anxiety will help a manager determine urgency for a change versus importance of the change

MAKE A PLAN, OR START PLANNING?

After completing a thorough analysis of the situation, the manager can now use some project management tools to focus on planning. I’ve noted that project managers are a lot like NFL football coaches. We spend the majority of our week in planning and just a small portion performing the execution component. Here are some specific ways to help staff and the organization through times of chaos, starting with the people:

For Yourself

• Get your bearings. Just as airlines instruct passengers to put the oxygen mask on themselves first, before helping others, you need to make sure you are ready to face the issue head-on. This means you need to clarify the scope of your efforts. Whether they are projects or process (operations), you need to ensure that you are clear on the scope and vision of your efforts.

• Sleep right. Without sleep, you will not be focused enough to make good decisions.

• Eat right. Eating or drinking excessively will only hamper your health.

• Exercise right. Make sure to take a few minutes every morning to get the circulation flowing and metabolism started. Even a few sit-ups and some jogging in place can really help a person’s mood and metabolic rate.

• Add tools. Consider what you need to monitor the business and marketplace within logical constraints, not emotional triggers. Resource management is one of the 10 knowledge areas in project management, and it gets less attention than scope, schedule, or cost (budget) management. Don’t ignore it! Determine the resources required to be successful, such as a computer, headphones, technology, and so on.

For Employees

• Team meetings. Regular team meetings, including agile daily stand-ups, will help keep people on track and connected. During any “chaos” event, a feeling of helplessness and loneliness is the enemy. Remove the fears and help the team.

• One-on-one check-in. Make sure to have individual conversations, not just group discussions. Certain employees may feel left out because they are too shy to speak up in the group setting. Pay attention to their needs as well.

• Team “fun” exercises. The intent is to build camaraderie beyond the basic interactions while working. Find a way to team build. A few ideas include Dave and Buster events and virtual happy hours (everybody has their own snacks and drinks but shares time chatting with one another).

• Technology needs. During any upset in business, the first thing some managers do is to cut back on resources to avoid unnecessary costs. However, updating technology and looking forward may provide efficiencies and confidence needed to make it through the disaster. More, not less!

For the Organization

Once you have a plan for yourself and employees, now think of the business:

• Policy. What changes to policy will be required? The pandemic changed a lot of company practices requiring individuals to work at the office or onsite. Overnight, something that was prohibited became not only the norm but a requirement. During the next “chaos” event, what policies might be revisited? Even if it is a weather-related or a financial, competitive, health, or other unknown event that causes the change, evaluate and be willing to drop or modify policies for the new reality.

• Product. Perhaps competition is adamant and aggressive about new products, and they disrupt what has been a comfortable position for your organization. Cities replaced rural and agricultural living in the 1870s. Digital media displaced newspapers in the 1990s. Online banking has displaced much of “personal banking” over the past 30 years. Electric cars have and will continue to displace fossil-fuel vehicles in the years to come.

• Process. Consider how many small and large food chains had to change from dine-in to pick-up or delivery modalities during 2020 within a few weeks’ time. Manufacturing lines had to space employees out rather than “maximize” space usage. For some, shortcuts were taken, but that’s not recommended. Instead, re-envision a new process that meets the chaos situation.

ADAPT AS NEEDED

Recognize that every plan needs to be flexible. Whether short-term or long-term planning has occurred, we need to be open to further unexpected surprises. This is where the battle between agile and predictive project management tools can instead be a helpful selection process.

A Guide to the Project Management Body of Knowledge, Seventh Edition, or PMBOK© 7, is scheduled to be released in late March 2021 and is intended to focus on outcomes. Project managers should use the correct tools from any methodology that is appropriate for their project. This means that some managers will need a lot of adaptive or agile tools upfront, but also should think long-term predictive tools for when things settle.

Think of it this way: When you have an emergency, you use an ambulance. If there is no emergency, you use your regular vehicle.

In the short term after “chaos” hits, consider using agile tools because it means that you will get through the day or week providing some form of value. Use 15-minute daily stand-up meetings to get feedback on what has been completed, what will be completed, and roadblocks for each team member. Approach the plan for only a week or two to make sure that every effort is worth the time. If something is not going to bring value in the next couple of weeks, then delay or eliminate that activity.

Once things begin to settle down, you can make the long- term plans such as formal six-month, one-year, two- year, and five-year strategies for operational and project modifications. Use predictive tools such as formal calendars and resource scheduling tools. Proper sequencing will keep you from wasting precious resources during tough times.

Whether the disaster you face is temporary or permanent does not matter. If it is a condition related to financial, resource, scheduling, communication, or scope elements, it does not matter. You can tailor your response to the situation at hand by using AMA: Analyze, Make a Plan, Adapt!

ABOUT THE AUTHOR:

Brian Porter is an adjunct instructor at American Management Association. Porter has handled all aspects of product development and project management, including ideation, development, testing, documentation, NRTL listing, field testing, patent preparation, market rollouts, training, litigation support, and every other aspect of bringing a product to market.

How Post-Pandemic Leaders Can Drive Performance and Innovation

By: Inga Carboni and Rob Cross

Increasingly, organizations rely on networks of agile teams to get work done—a trend that will only intensify as we move into a hybrid, post-COVID world.

This transition will be difficult for leaders in part because they will need to manage collaboration without some of the structures they have grown used to—face-to-face interaction and co-location promoting serendipity, to name a few.

But other trends have also been emerging that require a new look at teams in the post-pandemic world. For example, employees are on many more teams—twice as many as they were five years ago—and teams are larger and more geographically dispersed than in the past. Research reported in Creative Conspiracy indicated that the average team size in U.S. companies in 2013 was 15. And while Katherine Klein of Wharton reported back in 2006 that the ideal team size is five people (and accepted wisdom these days is five to nine people), it is not unusual for individuals at present to find themselves on, or even leading, teams of 20 or more, many of whose members may be in different time zones and accessible mainly through electronic communication.

As people are put into more and bigger teams much more rapidly than ever before, we need new ways of driving results. Increasingly, researchers and practitioners are reconceptualizing teams as networks that need to form rapidly to produce needed results. This research is showing that the structure of internal relationships (social capital) contributes as much to team success as does the composition of the team (human capital).

To better understand the practices that yield performance in today’s teams, we conducted 90-minute interviews with more than 100 high-performing leaders in 20 different organizations. Each individual was identified as having successfully led multiple teams over at least 10 years. The organizations included a wide range of industries (for example, financial services, high tech, consulting, manufacturing, food services, hospitality) and ranged in size from several thousand to hundreds of thousands of employees. Here, we summarize what these leaders did to enable performance through collaboration.

CULTIVATING INTERNAL TEAM COLLABORATION

We found that high-performing team leaders optimize network structures. In contrast to advice based on old models of team development, the leaders in our study did not focus excessively on team-building activities, nor did they limit their efforts to building strong one-on-one relationships with team members. Instead, they assessed and shaped the relationships among team members, purposefully redesigning the network structure to optimize it for team performance. More specifically, they manage the center, integrate the edge, minimize silos, and generate agility.

Manage the center. To manage the center, the leaders in our study took steps to prevent the people who are most centrally connected in the network from becoming overloaded with collaborative demands. Collaborative work (that is, time spent on phone calls, in virtual or face-to-face meetings, and on email or other collaborative technologies) is rarely evenly distributed. Very often, a small set of people— leaders, experts, long-tenured colleagues, or colleagues with whom others enjoy interacting—absorb a much higher volume of collaborative work than do others. Typically, 3% to 5% of the people account for 20% to 35% of the value-added relationships—collaborations that generate sales, efficiency gains, key innovations, or other forms of value.

This means that relatively few employees have a substantial and quantifiable impact on performance, yet, often, they are not managed any differently than those who do not make comparable contributions. All overwhelmed employees suffer due to the volume and diversity of demands; their work quality often falls off, they are at much greater risk for burnout, and they are far more likely to leave the organization.

The leaders in our study engage in three practices and a number of actions to manage the center of their teams. These leaders ensure that individuals, in general, or those in certain roles within the group do not become so overloaded with collaborative demands that they are unable to support their colleagues in a timely fashion; they identify and reward/ acknowledge employees who engage in collaborative behaviors that make their colleagues more effective; and they seek out influential team members to promote alignment and team engagement.

Simple network analysis techniques can quickly reveal people at risk for collaborative overload. Take 10 minutes to draw the network map of your team, and who turns to whom for information to get work done. Have two or three teammates review the diagram and make additions as needed. Use this information to distribute collaborative demand more equitably.

You should publicly acknowledge and celebrate collaborative behaviors to promote engagement and signal the importance of collaboration. For example, set a regular reminder to spend 30 minutes once a week to thank a small number of people for their efforts in the way that means the most to each person, such as a handwritten note, an email with cc’ing of partners, a private conversation, or recognition of that individual’s contribution during a team meeting. And you should invest time to locate and proactively engage negative opinion leaders. Crafting mutual wins early can pay off substantially over time.

Integrate the edge. Integrating the edges of a team’s network structure means pulling in people who are not fully included in the team’s interactions. Frequently this means newcomers and remote workers. But surprisingly, we also find that 20% to 30% of the employees considered as top talent—those on top talent lists or in the top 20% performance category— migrate to the fringe of the network. Often, these are people who have learned how to meet their revenue or other performance management objectives without making much of a contribution to their colleagues’ efforts.

To integrate the edges of their teams, the leaders in our study rapidly integrate newcomers, proactively engage remote and virtual group members to ensure integration, create short forums for serendipitous interactions, and ensure that subject-matter experts and high performers are available to help their colleagues in a timely manner.

To integrate newcomers, assign them a “buddy” who is respected and well connected in the network. One way to engage remote and virtual team members is by instituting events such as “watercooler Wednesdays” in which all team members can join an instant message group, such as WhatsApp, for informal conversations about binge-worthy shows or holiday shopping. And to increase collaborative accessibility to high performers, have them serve as technical consultants.

Minimize silos. A big part of a leader’s work is minimizing silos. Collaborative breakdowns diminish performance and innovation and have various causes. In one case, it might be poor communication technology. In another, it might be that none of the groups that should be working together knows what expertise exists in the other groups or understands how that expertise can support their work. Misaligned incentive schemes also can foster parochial behaviors, as can leaders who do not like each other. Companies often try to minimize silos by launching cultural change programs, formal reorganizations, or new collaborative technologies, but these broad solutions often do not address the issues that impede collaboration at crucial network junctures.

To minimize silos, the leaders in our study facilitated connectivity at specific silos across functional lines, physical distance, hierarchical levels, demographics, or expertise domains where collaboration is critical to performance. They also ensured that cliques or subgroups do not form within the team in ways that diminish alignment, performance, or engagement.

We suggest that leaders locate efficiency losses for targeted action by setting up weekly check-in meetings with people whose role requires them to work across boundaries to help them understand when and how to include others earlier in the process. And to prevent the formation of an “inner circle” subgroup, purposefully invite quieter voices into the conversation and force reluctant but capable members to take on added responsibilities.

Generate agility. Generating agility encourages team members to efficiently and adaptively work together in ways that respond to environmental demands. In a recent Korn Ferry survey that queried more than 750 CEOs worldwide about how their companies could succeed during the pandemic, one in four stated that “breaking down hierarchies and building agility” was paramount. Agility requires team members to collaborate rapidly and to easily share their sometimes differing perspectives on how best to respond to an environmental demand.

To boost their teams’ agility, the leaders in our study assess and streamline collaborative activities within the team to promote efficiency and engagement and cultivate diversity in network interactions to promote team agility and innovation. We suggest that you employ formal or informal approaches to analyzing collaborative time demands, such as plotting a grid of work streams and standing meetings that are employed to coordinate work. Then, reconsider the purpose, agenda, and required participation in each meeting. And you should leverage moments of connection—however brief— with people who represent different subcultures. This can be done by chatting for a minute or two with someone at the company café or asking someone about his or her weekend when a meeting ends early.

Team performance in a post-COVID world will require more intentional cultivation of networks. Rather than leading with available tools—video calls and instant messaging—more successful leaders will necessarily need to reflect on the points in the network they are trying to influence. Taking more targeted actions to promote desired collaboration will both yield performance and keep leaders and employees from burning out.

ABOUT THE AUTHORS

Rob Cross is the Edward A. Madden Professor of Global Leadership at Babson College and a co-founder and research director of the Connected Commons. He is the author of 85 articles and five books, including the upcoming book Beyond Collaborative Overload with Harvard Business Review Press.

Inga Carboni is on faculty at William and Mary and a research associate with the Connected Commons. She has published extensively in both academic and practical outlets on the topic of networks.

How to Lead Through the Pandemic and the Recovery Phase

By: Tomas Chamorro-Premuzic

Among the wide range of fascinating insights from the 100-year-old science of leadership, perhaps none are as uncomfortable as the notion of a significant gap between the qualities that propel people into leadership roles and those that are actually needed to be an effective leader.

As I highlighted in my last book, Why Do So Many Incompetent Men Become Leaders? (And How to Fix It) (Harvard Business Review, 2019), this gap also explains the pervasive gender imbalance in leadership: When we select leaders on the basis of their confidence, charisma, or power hunger, it should not surprise us that we end up with more male than female leaders. By the same token, these parameters explain why leaders are not typically known for their competence, humility, or integrity, and why narcissistic individuals over-index at the top of any organizational hierarchy or system.

If this was a problem before the pandemic, it is now a disturbing reality, one that accounts for the widespread leadership failures around the globe. Too many leaders are out of depth, exposed, and have nowhere to hide. As I observed in my March 15, 2020 article in Forbes, “Why Are Some Leaders Better at Managing a Crisis?”, while many of the key features of the pandemic are not as “unprecedented” as most people think—so yes, the word has been overused in unprecedented ways—there is surely one unique aspect to this crisis: It is a global leadership experiment like we have never seen before. Leaders around the world are being put through the same test, with unparalleled access to the same standardized KPIs, and the world is watching closely.

Furthermore, since we have never dealt with this virus before, let alone a digital-age pandemic, it has been largely impossible for leaders to rely on their past performance and expertise to mitigate this crisis. Instead, every leader has had to start from scratch, with a blank slate, and work out how best to mitigate the damaging consequences of this devastating virus.

THE POSITIVE CHARACTERISTICS OF CRISIS LEADERSHIP

As organizations (and indeed societies) prepare to face the next phases of this pandemic, there is no question that leadership will remain a key focus area. With that, it is important to reflect on what we have learned so far, not just from this crisis but also from the robust body of research derived from solid decades of organizational psychology and an increasingly interdisciplinary science of leadership.

Crisis leadership is just good leadership. There is a long tradition of research around crisis management, which has identified some of the decisive traits and behaviors to predict how some leaders are much better able to manage crises than others. In my talk at the Global Leadership Network’s event in August 2020, “Six Traits Leaders Typically Lack During Crisis,” I outlined that higher levels of intelligence, curiosity, humility, resilience, empathy, and integrity are all critical to improve leaders’ performance during a crisis. And as it turns out, these traits also elevate leaders’ performance during good times—that is, when there is not a crisis. But in a crisis, leadership matters even more: Leaders’ right and wrong decisions will exacerbate effects on their followers, raising the stakes to a matter of life and death. So while mediocre leaders may go unnoticed in good times, we pay a high price for leadership incompetence when the challenge is big.

The good news, however, is that we don’t need to completely revise our leadership models so they are crisis-proof. In fact, all we need to do is select good leaders. Of course, in a logical world, we wouldn’t have needed a pandemic to realize that people are generally better off when their leaders are smart, curious, humble, resilient, empathetic, and honest—or at least show some of these qualities—but in the real world we did. Our only hope is that the crisis reminds us of the importance of picking leaders based on their competence, rather than on their ability to entertain, seem confident, or successfully acquire power irrespective of their intentions or talent. By the same token, we would be suffering a lot less from this crisis if we had made it a habit to pick leaders with these foundational talent attributes, so here’s to learning this lesson and improving things in the future.

Context still matters. Although crisis leadership is in essence just good leadership, the context still matters. Indeed, according to “When and How Team Leaders Matter,” by J. Richard Hackman and Ruth Wageman (Organizational Behavior, 2005) over 60% of well-performing teams could attribute their performance to “someone’s personality or behavior—and that someone frequently was the team leader.”

And as Barbara Kellerman and I noted in our February 16, 2021 article in Fast Company, followers matter. This has been clear during the pandemic, as even in the case of high-performing leaders—such as Jacinda Ardern of New Zealand or Tsai Ing-wen of Taiwan—there were some favorable conditions, such as location, technological infrastructure, healthcare system, and indeed good followers, that enabled them to tackle the pandemic with success. By the same token, one cannot fully blame Donald Trump or Jair Bolsonaro for their country’s poor results, because inequality, size, governance, and the mindset and culture shaping follower behavior independently influenced results. Of course, in the case of the United States we are seeing in real time how much can change when we change the leader, but it is always hard to draw conclusions with an N of 1, and even though Biden’s administration deserves praise for its vaccine rollout, it is also true that the vaccines were produced during his predecessor’s mandate.

Organizations can change. A silver lining from this crisis is that incompetent leaders have been exposed (and in some instances also eliminated), which of course came at a high price. One hope is that organizations learn the lesson and start to take leadership selection more seriously. This will require the willingness and ability to become more datadriven in their assessment of leaders. As Jeffrey Pfeffer points out in his book Leadership BS: Fixing Workplaces and Careers One Truth at a Time (Harper Business, 2015), and as I noted in The Talent Delusion: Why Data, Not Intuition, Is the Key to Unlocking Human Potential (Piatkus, 2017), even before the pandemic there was clear evidence for the idea that leadership competence is the exception rather than the norm. Indeed, if leaders were chosen on talent, Gallup would not report that only about 22% of the global workforce is engaged (this, in mostly large or leading organizations).

In a world where leadership and management roles were assigned on the basis of competence, most people would trust their boss and be inspired by them. Instead, the average experience people have with their bosses is rather more discouraging, if not traumatic. And we continue to see reports of toxic leaders who derail and whose dark side keeps harming their teams and organizations.

Destructive leadership was rampant before the pandemic, and science-based tools could do much to mitigate it. It is noteworthy that the emergence of artificial intelligence and analytics could help, because the only way to evaluate leaders is to actually analyze how they behave and link these data to organizational outcomes. Yet there is clearly a human tendency to distrust AI and campaign against it as a biased tool. Meanwhile, human biases are alive and well, and they will continue to advance people’s careers on the basis of privilege, nepotism, political influence, and “culture fit.”

We’ve all heard it many times: Crises are opportunities to change, as well as traumatic periods of transition where the old is not ready to die, and the new is not ready to emerge. Our big hope is that our old and outdated leadership archetypes, and our tendency to select people based on style rather than substance or confidence rather than competence, will die or at least fade away with this crisis. That way, we can look forward to a future where our lives are not put in the hands of those who are in it for themselves, or have no capacity to make things better for us, but rather are smart, kind, and honest leaders. AQ

ABOUT THE AUTHOR

Tomas Chamorro-Premuzic is the chief talent scientist at ManpowerGroup, a professor of business psychology at University College London and at Columbia University, and an associate at Harvard’s Entrepreneurial Finance Lab.

7 Challenges That New Managers Need to Prepare For

By: American Management Association

Many people work hard for a promotion into management. Unfortunately, many of those same people aren’t prepared for how hard they’ll have to work after they’ve achieved that coveted promotion in order to be perceived as a manager by their staff, peers and senior management. Not surprisingly, the transition from individual contributor to manager can be stressful, as numerous studies have found. According to one study by an HR consultancy, nearly six out of ten managers rated the stress level of being promoted to manager as second only to dealing with a divorce.

Having the title of manager doesn’t automatically confer power, privilege or respect. But the title of manager can secure such recognition and launch a rewarding career for those who are prepared for the challenges that accompany their new role. A world leader in professional development for nearly a century, American Management Association (AMA) has identified seven challenges new managers commonly face and offers tips to help overcome them:

1. Managing expectations
Knowing what your team—and senior management—expects of you is every new manager’s first order of business. Working conscientiously to manage and meet those expectations greatly affects a new manager’s success.

2. Establishing credibility 
Amidst all the stress, it’s easy for new managers to feel insecure and question their own ability. As a new manager, it’s important to remember: You got the promotion because you earned it. Find confidence by taking stock of your past leadership experiences and your outstanding skills. To be seen, heard and believed as a manager, bring your expertise to the job every day.

3. Balancing technical and management expertise 
Being a manager requires a new set of skills. As a manager, you are no longer responsible for producing—now, your job is to get things done through and with other people. Your success isn’t just measured by what you do, but by what your staff is able to achieve. Avoid the pitfall of micromanaging your staff’s work, and instead give them the guidance and space to succeed.

4. Finding rewards in different places 
As a new manager, you might at first miss being recognized for your individual contributions and achievements. You may not always feel the same sense of accomplishment you felt as a staff member. For your own job satisfaction, look for other rewards—perhaps in how you’ve helped your staff work through a conflict or improved your team’s ability to work together.

5. Managing time 
As a new manager, you still have to manage your own time efficiently. But now, you rely on your staff’s ability to make efficient use of their time as well. Be aware of how the demands you place on your staff affect your own time management. Work to make it easier for them to meet deadlines and give you the information you need on time.

6. Managing change 
Yes, change can be stressful. Yet, it’s unavoidable and pervasive. As a manager, one of your new roles will be that of a change agent. So, get comfortable with change. Not only will you be called on to implement change—sometimes exciting, sometimes unsettling—but you must be prepared to help your staff accept change and support them through it.

7. Supporting risk-tasking 
Taking risks is the key to achieving breakthroughs. Be an example by taking risks and taking action to get results—and encourage your team to follow. Recognize that allowing your team to make mistakes can often lead to the most creative solutions.

A new manager’s job is stressful. Being aware of and ready to handle common challenges if and when they arise will help ease that stress and smooth the transition. Above all, do not expect too much too soon. As a new manager, give your staff and upper management time to adjust and see you in a new way. Be patient with yourself too.

6 Ways to Strengthen Collaboration at Work

By: American Management Association

Regardless of changes to how and where we work, team members still need to successfully collaborate to get good results and keep a business running. In a recent survey, American Management Association (AMA) asked its members and seminar participants to rank several capabilities critical to thriving in the post-pandemic workplace. Managing and motivating a remote or hybrid team was among the top three priorities, along with improving virtual communication skills and building and maintaining strong relationships. 

Whether team members work side-by-side in the same office or screen-to-screen from different buildings, neighborhoods, or countries, good results depend on strong collaboration. But that doesn’t always “just happen.” Building effective collaboration starts with establishing a firm foundation. Key components include shared goals, deliverables, products, or services; agreed-upon guiding values, principles, or norms; disciplined processes, roles, and responsibilities; and sufficient resources. Still, even with all of the essential building blocks in place, sometimes a team struggles to work well together because some people aren’t natural collaborators.

How can managers get buy-in for collaboration at work? A world leader in professional development for nearly a century, AMA stresses the importance of making a clear business case for collaboration, setting an example by being collaborative, and encouraging reluctant collaborators through coaching, support, and recognition. Here are six steps for motivating tentative collaborators and improving collaboration team wide:

1. Be an ally. Don’t be a naysayer or, worse, an adversary. To foster collaboration, welcome input from all collaborators, regardless of their experience or comfort level. Simple statements, such as “I like your suggestions” or “That sounds like an interesting idea,” often speak volumes, letting team members know that you value their opinions. 

2. Say what you see or sense. If you observe or pick up on something troubling, say something. For instance, you might say, “You seem a little reluctant to share your opinions.” Do this in a way that’s genuine, caring, and without criticism to avoid making the reluctant collaborator feel singled out and even more uncomfortable.

3. Ask and listen. When someone is having trouble collaborating, take the time to find out why. Ask them to share their concerns or feelings, perhaps starting with, “What can you tell me about that issue?” Then, listen to their response. 

4. Reinforce the benefits of collaboration. Talk up collaboration until it becomes a shared value and an everyday best practice. Offer ongoing encouragement, such as, “The team seems to be getting closer to an answer. Let’s keep going.” 

5. Seek out suggestions for improvement. Your team members are the ones working together after all. You might be missing something. “What would make this whole process work better for you?” might be a question to ask everyone on the team—weak and strong collaborators alike. 

6. Offer choices, not demands. Managers should hold team members accountable when they refuse to collaborate. But when dealing with a person who isn’t a natural collaborator, threats and punitive consequences tend to be counterproductive. Instead, try asking, “Could you give me two or three ideas tomorrow morning?” 

With the right approach, anyone can be a valued collaborator. Everyone has good ideas. All it takes is a little time and care to ensure that your team makes the most of them.

5 Steps for Managing Conflict and Improving Teamwork

By: American Management Association

As every manager knows, a cohesive and smooth-functioning team is crucial to the success of any task or project. In today’s global business world and emerging post-COVID workplace, teams are increasingly virtual or hybrid. Yet, whether they collaborate through technology or work together in an actual office, team members are bound to have different opinions, ideas, work styles and perspectives. Those differences often give rise to conflict. Sometimes, conflict can be creative, an energizing force that leads to innovation. However, when conflict is not productive and not addressed, it can derail teamwork, leading to declines in morale and productivity, misunderstandings, and animosity. At its worst, conflict can become toxic.

To get a handle on conflict before it escalates and does harm to their teams, managers must first know what type of conflict they’re dealing with. There are two basic types of conflict: task- (or process) related and relational. Task-related conflict typically occurs in complex projects where work between team members is interdependent and reciprocal, such as when one person’s ability to begin their task depends on another person’s task first being completed. If left unchecked, this common type of conflict can lead to the second, and potentially more damaging, type. For example, clashing views on how best to execute a task might feed into cultural stereotypes and fuel heated arguments between team members.

Learning how to de-escalate conflict is essential to keep a team on track and work proceeding. From American Management Association (AMA), a world leader in professional development for nearly a century, here are five steps for effectively managing task-related conflict:

Step 1: Identification
First, identify the source of the conflict. Ask the opposing team members to explain their side, clearly and calmly. Have each person involved write a simple statement of what the issue is, either on a whiteboard during a meeting or by posting on a shared site.

Step 2: Response
Second, allow each person involved to respond to the issue and the other side’s position. For virtual and hybrid teams, consider using Chat, Word Comments, or the Word Tracking function. With on-site teams, invite opposing team members to engage in a discussion. Set firm boundaries to ensure respectful communication, with zero-tolerance for name-calling or derisive comments.

Step 3: Resolution
Third, analyze all the facts of the situation. Using a systematic decision-making process, work towards a solution that’s acceptable and do-able for all team members.

Step 4: Enactment 
Fourth, put the agreed upon solution into practice and monitor progress. This step is where any necessary adjustments can be made.

Step 5: Evaluation 
Fifth, evaluate how well the solution worked and whether it’s workable on a long-term basis. Note any changes needed to improve the process moving forward.

Effectively managing task-related conflict minimizes the incidence of relational conflict in the workplace—though it can still creep in. Virtual and hybrid teams can be more vulnerable to relational conflict. Relying on technology as the primary or only means of communication can create difficulties in establishing a shared context, building rapport, and navigating cultural differences. Here are a few tips for avoiding relational conflict in the workplace:

Increase awareness of symptoms. Ignoring a team member’s snide aside or casual use of a demeaning label opens the door to a harmful pattern. Simply commenting on less-than-optimal behaviors immediately sends a clear message about what will not be tolerated.

Set ground rules for conduct. For example, if email responses are expected within 24 hours, ensure this is enforced. In addition to reducing conflict, this helps to maintain consistency, workflow and productivity.

Place a priority on building trust. While leaders establish the culture and set an example, building trust is a team-wide effort. Make sure every team member knows that they’re responsible for building trust and, in turn, managing conflict before it escalates.

Conflict in the workplace happens—it’s natural when people with differences work together. But conflict doesn’t have to deter teamwork and impact results. By keeping AMA’s five-step process and expert tips in mind, conflict is highly manageable and easy to monitor and minimize.

4 Steps for Conducting a Painless Performance Appraisal

By: American Management Association

Nearly everyone dreads them. Performance appraisals are challenging—to both managers and their team members. So, why do companies continue to practice this anxiety-inducing formal exercise and repeat it annually, if not biannually or even quarterly? Despite their notorious reputation, performance appraisals serve an important two-fold purpose: to help the manager determine the value and productivity an employee contributes to the organization, and to help employees overcome their weaknesses, develop their strengths, and progress in their career.

No matter what template or process an organization uses, the difficult work of conducting a performance appraisal falls squarely on the shoulders of the manager. After thoroughly assessing a team member’s overall capabilities and specific results, achievements, and shortfalls over the past year or months, as well as their potential for growth and success moving forward, the manager must then sit down and discuss it all with the employee, one-on-one and face-to-face, whether in person or virtually. It’s no wonder both managers and team members resist or procrastinate when it comes to carrying out this company-mandated process.

A world leader in professional development for nearly a century, American Management Association (AMA) is committed to making those difficult performance appraisal discussions easier for managers and not so dreadful for employees. For starters, here’s a four-step process that every manager can apply to any employee review:

1. Let the employee know what to expect. Open by explaining the purpose and process for the performance appraisal discussion. Place a priority on constructive feedback and strategies to support the employee’s development, rather than harsh criticism and warnings.

2. Start with the problem. First, focus on your concerns about the team member’s weaknesses. It might be something as simple as, “Lately, I’ve noticed you’ve been missing deadlines.” Why begin with a problem? Because it’s uncomfortable—so get it over with and move on. Once the worst is out of the way, the employee’s tensions will be relieved. For example, if the person keeps anticipating criticism, they might not even hear it when you praise them.

3. Come up with a solution together. Ask the employee for their take on the problem. Then help them come up with a workable solution. Talk it through together. Share your insights and highlight the development areas the employee should work on—for example, “Working on your time management skills could help things go more smoothly.” Aim to incorporate goals that are SMART: Specific, Measurable, Achievable, Relevant, and Time-Bound.

4. Recognize their strengths. End the discussion by talking about the team member’s strengths. Give specific examples—for example, “You did an excellent job with the marketing proposal last month.” Acknowledging what the person does well is likely to motivate them to want to do better, instead of leaving them feeling demoralized. Wrap up the performance appraisal on a positive note of praise and encouragement.

This four-step process is meant as a framework. Every manager should develop their own style. Try other approaches and decide what works best for you and your team. Practice makes perfect—and with it, performance appraisals really can be painless. And remember: A performance appraisal discussion provides managers with an opportunity to call attention to a team member’s achievements and affirm their future potential.

The effect of talent management practices on employee retention at the Namibia University of Science and Technology: Middle-level administration staff

Jacobina Amushila, Mark H.R. Bussin

Introduction

Orientation

Talent management (TM) is one of the modern functions of human resource management (HRM) and the most inspiring topics in management (Hatum & Preve, 2015). Talent plays an important role as a part of the HRM function in managing all employees within the organisation that leads to high performance (Tetik, 2016, p. 44). The role of HRM has rapidly changed from only concentrating on hiring, employee benefits and payroll to strategic human resources whereby the focus is on sustaining and driving business strategies. This raises questions about the necessity of re-skilling of HRM functions (Sparrow & Makram, 2015, p. 249). This represents a major shift in how business executives view the value of HRM, as they understand the strategic value of TM and the impact that strong talent can have on financial outcomes (Silzer & Dowell, 2010, p. 3). Silzer and Dowell (2010, p. 3) further state that ‘talent is becoming recognised as a core competitive asset in any business organisation and serves as a currency of business’.

Namibia has been facing major challenges in retaining talent in most key sectors of the economy (Deloitte, 2015, p. 4). According to Letchmiah and Thomas (2017), it is still a major concern for many organisations to retain top-performing employees and thus, leadership strength is negatively affected. Talent management (TM) is the process that ensures an organisation has access to the human capital and helps in attracting, developing, engaging, retaining and utilising talent to the mutual benefit of the business and employees (Bussin, 2014, p. 17). However, employee retention can be defined as ‘an organisation’s ability to hold and keep in the possession and to engage the services of high potentials and value contributors in mission-critical and scarce skills positions’ (Bussin, 2014, p. 26):

Organisations used to view talent as an audience, like fish waiting to be caught and not as a community, an ecosystem or fish swimming all over the global talent pool that are harder to catch. (Frost & Turner, 2016)

Research purpose and objectives

Talent management, as such, is well researched in most parts of the world; however, it is limited in Namibian industries, as it is a fairly new approach in many organisations in Namibia. Therefore, although the shortage of talented workforce has attracted vast attention, the literature gives little recommendations on how to deal with it. The researcher is of the opinion that the problem is that organisations are still attached to the old perception of human resources and thus, there is a lack of understanding on the effects of TM on employee retention. Thus, the Namibia University of Science and Technology (NUST) may continue to face challenges in retaining key employees or absenteeism if TM is not implemented. The institution may extend its recruiting to foreign labour markets. Neither the NUST nor the Ministry of Education has commissioned to research and explore recruitment and retention trials facing NUST and the higher education sector in general to analyse the root causes (Van Hoof, 2020). The institutions of higher learning are vital to the success and growth of the Namibian economy. Retention of highly talented employees appears to be a concern at NUST given a high staff turnover (Deloitte, 2020). Research focused on retaining highly skilled employees might influence the institution’s success and growth, especially employees who are the key drivers in steering the institution in the right direction. If the challenges of retention are not addressed, this will probably negatively affect the university’s overall performance in terms of growth and professional support service to the education sector (Nambira & Enkali, 2019, p. 4). There might be a repeat of the threat in 2012 of employees striking, because of a lack of salary and increment benefits (NUST annual report: 2013). When employees strike, major drawback to the institution are caused because the absence of administration staff hinders service delivery to the students.

The researcher was motivated to undertake this study regarding employee recruitment, turnover and retention of high talent because it is deemed necessary by the fact that high performing and talented employees continue leaving the institution sighting similar reasons for leaving. It is envisaged to propose recommendations that will assist NUST in addressing challenges faced by the institution. The researcher attempted to obtain an understanding and insight into the institution’s recruitment and retention strategies.

To address the scarcity of literature that exists on the relationship between TM and employee retention within NUST and to understand whether implementation of TM can reduce employee retention, the following objectives will be explored:

1. To determine the impact of TM on employee retention at NUST.

2. To find the benefits that the institution can achieve by implementing TM.

3. To formulate the retention strategies adopted by the institution to reduce turnover.

4. To determine the effect that TM has on employee turnover.

5. To explore the relationship between TM and employee retention at NUST.

Literature review

The conceptual clarification of talent

According to Silzer and Dowell (2010):

[T]he term talent dates back to ancient Greeks and biblical times, starting as a measure of weight, then becoming a unit of money and later meaning a person’s value or innate abilities. (p. 13)

We might now refer to a person with innate abilities as a ‘gifted’ individual. There is no universal accepted definition of what talent constitutes, as different organisations and different sectors define talent in a wide range of ways. A few will regard employees who are the current top performers as talent, whilst others also classify those with ‘high potential’ (HIPO) as talent (Bussin, 2014, p. 46). Bussin (2014) further adopted a definition as stated in the Chartered Institute of Personnel and Development (CIPD) (2012) that:

[T]alent consists of those individuals who can make a difference to organisational performance either through their immediate contribution or in the longer term, by demonstrating the highest levels of potential.

Letchmiah and Thomas (2017, p. 3) define a ‘talented employee as the one who drives consistent excellent business performance through competency, commitment and involvement and has shown the potential to move up’. Silzer and Dowell (2010, p. 13) further stated that in an organisation, talent could refer to:

• an individual’s skills and abilities (talents) and what the person can do or contribute to the organisation

• a specific person usually implying she has specific skills and abilities in some area, or

• a group of employees in the organisation impacting superior performance and potential.

Egerova (2014), as cited by Van Zyl, Mathafena and Ras (2017, p. 2), believes that:

[T]he increasing attention to talent is affected by factors such as globalisation, knowledge-based reimbursement, changing the world of labour and also new forms of organisational and demographic changes. In some organisations, talent does not make a great difference about organisational performance. (p. 2)

‘Many bureaucratic organisations have been designed and structured so individuals do not need to perform at a superior level, they simply need to perform at an adequate level’ (Lawler, 2017, p. 10).

Talent management defined and the need for attention

According to Blass (2009, p. 17), cynics argued that ‘TM is just another human resources fad, but few fads seem to have turned themselves into a new trench in the labour market’. The roots of TM can be traced back to the downsizing and outsourcing trends in the 1990s, including the slimming down of graduate recruitment schemes. TM became more popular after McKinsey & Company coined the term ‘War for talent’ in 1997 for their research on TM and practices (Van Zyl et al., 2017, p. 1). Bussin (2014) stated that:

[M]any organisations responded to this ‘wake-up call’ by building methodologies, processes, and talent review mechanisms aiming to attract and retain critical talent and skills required to compete and ‘win the war’. (p. 85)

According to Van Zyl et al. (2017, p. 2), TM has progressed quickly up the corporate agenda in the recent years, which is apparent from the number of research papers published over the last few years. Typically, according to Poisat, Mey and Sharp (2018, p. 2), TM has three mainstream definitions: firstly, it is the description of a new HRM term; secondly, an insinuation of succession planning; and finally, the general management of talented individuals in the organisation. Bussin (2014) further stated that:

[E]ven after many years, organisations are still struggling with ensuring they have the right people, with the right skills, doing the right things, at the right time to achieve business results.

Armstrong (2012, p. 719) defines TM as ‘ensuring that the organisation has talented people it needs to attain its aims and objectives’. The term TM may simply refer to management succession planning or management development activities. Mahlahla (2018) mentioned that TM has three main goals, namely:

• to identify, handpick and develop employees who provide superior performance and stimulate others to perform with the same confidence,

• to find, develop and position highly qualified backup personnel for key positions in the organisation,

• to allocate resources, namely, rewards, training, coaching, job assignments and other inducements to employees based on their genuine or potential contribution to excellence.

Chee’s (2017) study on TM mentioned effective TM planning, leadership, continuous support, organisational unity, work-life balance and other environmental factors where important strengths to retain talented employees in the organisation.

According to Riccio (2010, p. 17), there is a shortage of TM in educational institutions as they spend too little time identifying their future leaders whilst claiming to be institutions for higher learning and training. Several researchers share the same view that there is a need for TM in every organisation and it must be incorporated to create and maintain a strong association of human resources development. Letchmiah and Thomas (2017) mentioned that TM relates to the implementation of integrated strategies that are designed to increase efficiency by developing improved processes for attracting, developing, retaining and utilising individuals with required talents and aptitude to meet existing and future organisational needs. Overall, according to Van Zyl et al. (2017, p. 2), there seems to be a lack of linkage between TM practices and the broader human resources system.

Employee retention

Talent retention is all the activities and practices used by organisations to avoid the departure of talent. ‘Because of the high costs associated with losing talent, it is difficult for organisations to gain and maintain a competitive advantage without retaining their talent’ (Ott, Tolentino, & Michailova, 2018, p. 16). Kibui, Gachunga and Namusonge (2014, p. 421) mentioned that employee engagement and employer–employee relationship should be durable, constant and link the employee to the organisation’s common values and by how the organisation responds to the needs of the employee. However, the South African Board for People Practices found in its annual HRM survey as cited by Erasmus, Grobler and Van Niekerk (2015, p. 34) that a significant 32% of South African organisations do not concern themselves with retention phenomenon, but at least 46% indicated the problem as a concern.

According to Lawler (2017), a major issue in talent development is talent retention. Talent retention as identified by Sparrow and Makram (2015, p. 250) is talent protection and is the process whereby organisations develop isolating implements to protect its talent resources from being lost to other organisations. Turnover is expensive from an administrative and development viewpoint, but its greatest expense often is the opportunity of the talent lost. Arguably, the economic downturn at the start of this decade has caused many employees to stay in jobs that they might have left earlier. As the economy recovers, up to half of the managers could be looking for new jobs as long hours, lower salaries and benefits coupled with their perception of ungrateful and greedy senior leadership, which propels disgruntled employees to leave as more opportunities become available (Blass, 2009, p. 13). The study of Onyango, Nzulwa and Kwena (2017, p. 637) revealed that employee retention involves taking measures to encourage employees to remain in the organisation for the maximum period of time. Onyango et al. (2017, p. 638) further define employee retention as a systematic effort by employers to create and foster an environment that encourages employees to remain with the organisation.

A significant number of employees leave their jobs before they have spent a year with the organisation (Lawler, 2017). Retention strategies should be adopted to strengthen the ability of organisations to attract and retain their workforce. Employee retention is important for building a productive, committed and healthy workforce (Onyango et al., 2017, p. 637). Kibui et al. (2014, p. 422) emphasised that retention is mainly to prevent the loss of competent employees in the organisation, which could cause harm to productivity and service delivery. Remarkably, in understanding challenges faced by organisations to retain staff, it is vital to understand employee turnover (Dhanpat, Modau, Lugisani, Mabojane, & Phiri, 2018).

The talent management strategies to enhance retention in an organisation

A TM strategy according to Armstrong (2012) consists of a view on how the TM processes blend with the organisation’s overall objective to acquire and nurture talent wherever it is. According to Poisat et al. (2018), TM strategies must be adjusted to accommodate the diverse values, features and attitudes towards work and corporate world view of the different generational associates working together. According to Bussin (2014, p. 81), succession management is one tactic to overcome leadership succession risks. Koranteng (2014, p. 23) further suggested that a succession system would be more successful if it is highly formalised, has a system of checks and balances, has adequate resources, has broad information, uses capability rather than governmental criteria for individual selection and has reliable staff. According to Robertson (2015), coaching new employees is important to incorporate coaching into a TM strategy to enable an increase in employee engagement and achieve talent development goals such as problem-solving capabilities and strategic thinking. TM suggests that organisations must be purposeful with their retention techniques to help engaging with newly recruited employees considered top performers. ‘The techniques may include selection techniques, developmental opportunities, and mobility within the organisations and promotion prospects’ (Letchmiah & Thomas, 2017). According to Davis (2016, p. 25), creative assignments is stating that “one cherished resource many organisations overlook is the value of existing employees. Attention on recruiting top talent is a priority for an organisation but so is the talent. Creative assignments is one of the many ways that organisations employ to increase the efforts and abilities of employees whilst performing tasks.

According to Bussin (2014, p. 74), talent development is learning and development of talent and is one of the most important components of a TM strategy and the development needs to be customised and experiential. Developing the right talent and doing so in the correct way is critical to the effectiveness of each organisation (Lawler, 2017). The aim is to use the business strategy to explore the talent attraction and development that may occur. Leadership development according to Armstrong (2012) is rather an unfavourable statement for those who are leaders by birth although there is a saying that leaders are born not made. However, further defines leadership development as a sense to acquire, develop and utilise leadership capabilities or the potential for it. Armstrong (2012) suggested possible conditions for effective leadership development as clear learning objectives, the opportunity for active practice, relevant timely feedback, suitable follow-up activities and a suitable mix of training methods. Employee engagement is one fascinating concept that comes along every few years in the HRM field that is fuelled by an intense business need and introduced into practice so quickly that it creates consternation and confusion in research and academic communities (Silzer & Dowell, 2010, p. 439).

Constructive retention strategies

All organisations are challenged with attracting and retaining a quality workforce to attain operational excellence and competitive advantage (Sparrow & Cooper, 2017, p. 78). Dhanpat et al. (2018) mentioned that it is vital to note that when organisations recruit HIPO individuals, they must develop and implement retention strategies immediately to prevent employees from leaving. According to Turner and Kalman (2014), retention is not only about money but also a universal process that will span most aspects of an individual’s management.

Mentorship programmes: Mentoring plays a key role in helping employees gain awareness into how senior leaders operate (Davies & Kourdi, 2010, p. 66). Organisations having employees mentored is one of the valued and effective professional development prospects they can offer employees. New employees can learn the ropes from an expert through a wealth of guidance, encouragement and support that will provide personal and professional benefits that lead to better performance.

Recognition and rewards system: According to Letchmiah and Thomas (2017), employees who perceive contributions equal to the benefits they receive are less likely to leave their jobs. The appreciation can be as simple as leaving a small note on the employee table, sincere email, a gift card, an extra day off or, as a surprise to a deserving individual, an internal promotion. To succeed in the war for talent, organisations need to clearly understand how numerous reward factors influence whether talented performers stay or leave their jobs (Pregnolato, Bussin, & Schechter, 2017).

Employee compensation: Mahlahla (2018) stated that other researches are on the opinion that the significance of financial compensation strategy on retaining employees varies as per individual and is not necessarily a motivator for everyone. Compensation plays a key role in attracting employees, improves an individual’s organisational commitment and ensures employee retention (Dhanpat et al., 2018).

An ideal package may include a salary, 13th checks, medical aid, pension, and retirement plans, generous paid leave and paid studies.

Communication and feedback: Dhanpat et al. (2018) emphasise that proper and frequent feedback is vital in retaining employees because employees perceive organisational support and increase commitment in the long-term. It is crucial to regularly connect with each employee and not allow issues to build up.

Perform exit interviews: According to Amsbary and Powell (2018):

[S]ome people switch jobs, moving because of a better salary and benefits and working environments while others burn out by working too long and too hard at a single position.

It is very difficult for an organisation to figure out why an employee is leaving unless the employee is asked. That is why Amsbary and Powell (2018) revealed that:

[I]t is vital for an organisation to schedule an exit interview with all employees who decide to resign. Since an exit interview is the last meeting between an employer and an employee, it will give a last chance for the employee to contribute to the organisation’s success. Organisations will be able to form trends and implement an effective change program to reduce or even avoid high turnover and improve retention.

Benefits of talent management

According to Sparrow and Cooper (2017, p. 51), TM has become a burning topic in management over the past few decades. The understanding of the TM topic has progressed in recent times, and the quality of experiential evidence has advanced and has countless benefits that organisations can utilise.

Retaining top talents: According to Letchmiah and Thomas (2017):

[T]op-performing employees are at times unnoticed and seen as organisational assets. As a result, employees become unhappy with and detached from their current employers and begin to look for new job opportunities where they feel more valued and appreciated. (p. 2)

Erasmus et al. (2015, p. 34) highlight that retaining high-quality talent is important to organisations as it eliminates the hiring, selection and onboarding costs otherwise suffered in replacing best professional talent.

Getting the right person for right position: Organisations that attract and retain the right talent and treat it well, reward it, develop it and deploy it correctly perform better than those that simply fill jobs (Lawler, 2017). The right person in the right job will give a better alignment between employee’s interests and job profile that leads to increased job satisfaction and their needs.

Enhanced professional development decisions: Poisat et al. (2018) state that the work environment is important for employee satisfaction and a positive relationship between management and employees. They further indicate that such a relationship needs to be of mutual respect, trust and confidence in employee’s capabilities.

Improved hiring: The success of an organisation’s hiring strategy is determined by an effective TM system that leads to a quality workforce (Van Zyl et al., 2017). As the saying goes, there is no successful talent at the top without bottom talent.

Competitive advantage: Engaged, motivated and skilled employees work in the strategic direction of the organisation’s goals and objectives, which creates a competitive advantage (Ott et al., 2018, p. 17).

Employee motivation and commitment: Poisat et al. (2018) state that that an organisation’s effective TM strategy helps them to keep their employees motivated and committed. A motivated workforce discourages employees to leave the organisation and do their job effectively. Not all employees are driven by money, so they will need to feel engaged and feel safe to be fulfilled.

Employee turnover

Employee turnover is a concern in many worldwide organisations, which decreases the operating costs of organisations, leaving significant effects on talent loss and disruptions in business activities (Dhanpat et al., 2018). Theron, Barkhuizen and Du Plessis (2014) distinguish between avoidable turnover (identified as those employees who express turnover intentions but do not resign) and unavoidable turnover (described as voluntary resignations because of various reasons that organisations have no control over). Narayanan (2016, p. 35) states that over the past few decades, management practitioners have shown more interest in the labour turnover model as it is always a significant concern to many organisations.

Mamun and Hasan (2017, p. 63) blame it on the organisation’s top management as they pay less attention and do not concentrate on this major issue, as they are possibly not capable of recognising the situation on how labour turnover harms the organisation’s overall performance. Ahmed, Sabir and Khoza (2016, p. 89) narrate that employee turnover results in the access and opportunity to enter into new employment. Armstrong (2012) believes that it is necessary to measure labour turnover and calculate its cost to estimate future losses for planning and also to recognise the motives on why people leave their employment. Numerous researchers, including the studies of Ahmed et al. (2016, p. 90), highlight similar factors on why people leave their jobs, such as lack of proper induction and orientation, a mismatch between experience, qualification and salary offered, poor training and development, low-grade working environment, career promotion and bad influence of co-workers. Besides these causes, Silzer and Dowell (2010, p. 240) added that employees also leave because they do not feel appreciated and because management fails to set clear job expectations for prospective employees.

Challenges associated with talent management

According to Sparrow, Scullion and Tarique (2014) ‘there are many debates and criticisms about the way TM is applied in practice and the topic is still lacking a definition and needs theological growth’. TM offers a fresh approach to addressing the hot topic through human resources affluence as many challenges need to be considered, especially the organisational level and employee level challenges (Silzer & Dowell, 2010, p. 753).

The study of Mogwere (2014, p. 23) stipulates that it ‘is important to remember that challenges differ from organisation to organisation even from one continent to another regarding experiencing and a shortage of talent’. Mogwere (2014, p. 23) uses Africa as an example, where organisations lack the ability to hire and retain a qualified workforce and face challenges such as poor salaries, working conditions, proper employee engagement and reduced rewards. Another challenge according to Mogwere (2014, p. 23) emphasises talent shortage resulting from the deteriorating quality of the education system, because of low funding caused by inadequate education and lack of facilities, equipment and tools; the most critical challenge is the lack of qualified academic staff. The studies of Koranteng (2014, p. 30) added that factors such as the current economic crises, hiring and selection, cultural diversities and proper human resources planning are affecting the management of talents.

Research design

This study was performed based on a qualitative research design to understand the effect of TM on employee retention at NUST. According to Bertram and Christiansen (2014, p. 40), ‘research design is a plan of how the researcher intends to methodically collect and analyse the data that is needed to answer the research questions’. The research information was solicited from both primary and secondary data. The researcher made use of a one-on-one interview with semi-structured questions with the study participants.

Research approach

The researcher adopted a qualitative research method by making use of a case study approach because of the complexity and nature of the study. According to Beaudry and Miller (2016):

[A] qualitative research remains constant among other approaches with distinctive features such as, the research focuses on people in their natural settings, samples are small and they are sensitive to setting and purpose, data analysis is inductive, and the researcher was the key instrument for data collection and is engaged with visible players. (p. 39)

Research strategy

The primary source of data for this study was obtained through the semi-structured interviews administered to the participants for both the middle-level administrative employees and the director of HRM.

Research method

Research setting

Interviews were conducted at NUST, which is a Namibian public tertiary educational institution that has recently transformed to a full-fledged university. The institution has grown since its academy years and employed close to 1000 employees, which comprise academic and administrative staff, and enrolled about 13 000 students in 2019. The research was conducted according to ethical rules, procedures and guidelines of NUST obtained from the department of the deputy vice-chancellor of innovation and research.

Entrée and establishing researcher roles

The primary researcher performed the role of interviewer.

Research participants and sampling methods

The 39 potential participants of the study were identified by finding all the names of the individuals that fitted the criteria for the target population. Detailed informed consent forms were e-mailed to participants seeking permission and approval to conduct interviews for gathering responses determining the influence of TM on employee retention of the sample population to address the research questions. An introductory e-mail on the setting up of convenient interview meeting times and venues that ensured confidentiality was sent out to individuals who had by that time consented to participate in the study. Interviews were conducted by first explaining the interview protocol and setting out the aims and objectives of the study. At the end of data collection through the structured interviews, 22 participants were interviewed, which represented a response rate of almost 58%. It was considered sufficient because data saturated well before then.

According to Bertram and Christiansen (2014, p. 59), ‘sampling encompasses making decisions about which people, settings, behaviours, and events will be included in the study by deciding how many individual groups or objects will be observed’. The unit of analysis of this research paper was the administrative middle-level management staff of NUST, because this group of administrative staff is where key activities of NUST revolve.

The researcher approached 39 participants who met the criteria from all 13 administration departments of NUST, meaning it was 3 participants from each department. Of the possible 39 participants approached, 22 were available and able to make the interviews. Data saturated long before all 22 interviews were completed. The sample selected was of the participants in employment for not less than 1 year because they have the knowledge based on the research problem. The participants selected were interviewed and the semi-structured were from the office of the vice-chancellor; office of the deputy vice-chancellor, administration and finance; office of the bursar; office of the registrar; human resources; library; centre for open and lifelong learning; department of auxiliary services; centre for teaching and learning; centre for corporative education unit; dean of students; centre for enterprise development and the department of information and communication technology.

Data collection methods

The data collection method was through semi-structured interviews with the participants selected as the middle-level administration staff members. The respondents answered the interview questions freely according to their ethics and principles without being exposed. The researcher adopted the use of open-ended and closed-ended questions to make it easier for data analysis. Semi-structured interviews lasted from 30 to 45 minutes and the researcher made audio recordings of all the interviews that were later transcribed and analysed.

Data recording

The researcher maintained a file to keep all the handwritten notes of what was said by the respondents because it was easy to lose crucial information if the papers were loose and no respondent would want to be interviewed twice and time was of essence. With the fast-paced technology world, the researcher made use of audio recording that was transcribed before analysis began.

Strategies employed to ensure data quality and integrity

The most cited concept of trustworthiness of quality criteria of this research method is that of Guba and Lincoln of 1985 and thus, this research’s trustworthiness was established by using credibility, transferability, dependability and conformability strategies. To that extent, the researcher ensured that data and data analysis will be credible and trustworthy. The participants were encouraged to support their statements with examples where necessary and the researcher studied the raw data to develop a theory to provide intended insight. Characteristics of data were examined by developing codes and core categories, recording and labelling them. The researcher ensured sending all interview transcripts back to respondents for feedback and correct any misinterpretations through member checking. The researcher made use of good descriptions of the respondent’s answers and the full research process. This enabled the reader to see if findings were in harmony with their experiences and to make transferability judgement decision. To increase dependability, the researcher ensured that the research process is logical, traceable and clearly documented.

The proposed research was conducted according to ethical rules, procedures and guidelines of NUST obtained from the department of the deputy vice-chancellor of innovation and research. Permission to conduct the research was obtained from the registrar, the consent form was developed to safeguard the participants and consent was sought from all participants before starting the interviews. According to Wiley (2013, p. 42), in the research setting, discretion means that identifiable information about individuals, collected during the process of research, will not be disclosed and that the identity of research participants will be protected through a process designed to ensure anonymity, unless they specified to be identified.

Data analysis

According to Beaudry and Miller (2016, p. 45), ‘in qualitative research, data analysis depends on the procedures for organising and reducing data and summarising results’. After collecting the information, the researcher carefully read the handwritten notes and listened to the audios to identify patterns amongst the data collected. Responses differed from the respondent’s different ways of answering the question on how they felt and thought. Thereafter, responses were transcribed into an excel worksheet for data analysis. It is a crucial step for analysing and organising qualitative data to be able to understand, see and allocate codes to sensitive and indirect data collected throughout the study. Responses for each question were assessed and analysed for key words and phrases for which codes were allocated. The codes that were identified were then organised into one dataset applicable to each question. The dataset was then analysed for resemblances, differences and replicate themes and organised order theme bands, categorised patterns and emerging themes for which each theme was named. This report underscored the themes for TM and employee retention, which emerged from the responses utilising thematic analysis technique. Thematic analysis is a search for patterns and themes within a dataset that discovers commonalities of capabilities, thoughts, beliefs, opinions and views, thus addressing the research questions being examined.

Reporting style

The study was reported as per the guidelines of the American Psychological Association (APA).

Ethical considerations

Ethical clearance was obtained from the Southern Business School, SBS-20201-0014-MM.

Results

The results are presented against the objectives of the study.

Research objective 1: To determine the impact of TM on employee retention at the NUST

The encounters of the study showed that NUST is not yet at the phase where it is supposed to be in terms of TM development and employee retention. At this stage, TM has not yet made significant progress and development to where it can influence employee retention. The findings exposed shortcomings in the implementation, such as the lack of overall leadership commitment that was found to be deficient and may impede delivery. The findings showed that the institution has invested in allocating fair salaries although it has not reached a point where non-monetary incentives have satisfied the policy of talent attraction and fulfil employee job satisfaction. Poor employee retention in NUST was also attributed to slow planning of developing a TM programme that could have been implemented ages ago, while others may be from the financial challenges that the institution was facing as a result of slow funding from the government.

Research objective 2: To find the benefits that the institution can achieve by implementing TM

The concept of TM has different meanings for different people, which means that the benefits of implementing a TM programme will differ from organisation to organisation. This is similar to the previous studies as most kinds of literature cited that TM implementation is crucial to recruit and develop talent not just for meeting today’s needs but also keeping in mind the organisation’s future. Thus, developing TM and managing it properly by keeping employees engaged and motivated is beneficial to NUST’s sustainability. To achieve that, the findings expressed that developing a TM strategy in line with the institution’s vision needs to be implemented.

There was a perception that TM improves employee commitment and support to employees throughout their employment and therefore retains top talents. The NUST has made it a priority to complete the implementation of TM to achieve competitive advantage in terms of retaining high performers in administrative operations.

Research objective 3: To formulate the retention strategies adopted by the institution to reduce turnover

This objective was to frame retention strategies that NUST is utilising to minimise employee turnover. This was made by establishing whether there was an understanding of the concept of employee retention and what it seeks to achieve in terms of what level the concept contributes effectively to the TM system. The findings revealed an insignificant percentage of lack of understanding of retention; many understood that retention strategies are necessary and critical for the institution to improve its capacity to retain its high performing employees. The respondents were not keen to identify institutional retention strategies, with individuals emphasising job dissatisfaction because of the institution holding on to traditional HRM practices. However, few respondents commended the strategy of allowing individuals to study with fees waiver options although it was limited compared to the opportunity given to the academics. The majority were rather suggesting strategies that would aid in reducing employee turnover and recommend for exit interviews to be performed to know the reasons behind employees leaving.

Research objective 4: To determine how effective TM is on employee turnover in the NUST

This research objective was to determine the effectiveness of TM process in NUST. The findings concur with the conclusions of various authors and kinds of literature mutually acknowledging that TM as a process ensures that the right skills are acquired, nurtured and retained by the organisations. The findings identified one primary reason that employees leave NUST is the lack of matching non-monetary incentives with that of their competitors. However, career development, job satisfaction and performance management in TM are important factors influencing an individual’s decision to stay. The results show that TM would anticipate HRM activities such as recruitment and selection, coaching, training and development and performance management to minimise employee turnover.

Research objective 5: To explore the relationship between TM and employee retention at the NUST

Many scholars, just like the findings of this study, revealed a positive relationship between the institution’s TM systems and its employees. The findings further showed that employee retention is a major factor in reducing talented employees’ turnover. Therefore, management should give much attention to talented staff to retain their services in the long-term.

It was perceived that talented employees always have high expectations regarding compensation packages but must be include attractive non-monetary benefits in the packages. Career development, job satisfaction and performance management appear to have a close association with low turnover rates maximising the institution’s overall performance. The study concluded that TM cannot be separated from employee retention because they go hand in hand.

Discussion

Outline of the results

The main objective of the research study was to discover the influence of TM on employee retention at NUST. From the qualitative analysis of the results of the interview protocol, the study discovered that TM practices have a significant effect on employee retention at NUST. NUST has gradually benefitted from introducing TM and developing a performance management tool from the analysis yielding several positive outcomes, with the aim to largely benefit after the complete implementation.

The findings also observed the importance of top management playing their key role in the TM programme to ensure the practice of talent retention whilst minimising employee turnover. The results on talent retention strategies showed absent retention strategies except for the old traditional processes in place that helped little in retaining employees. The literature review revealed several retention strategies to challenge the attraction and retention of a talented workforce.

The study findings expect employees to gain more attractive TM benefits that can motivate them to be more loyal to the institution. The study findings state that employees must adjust to change for TM to help them achieve their personal goals and objectives to develop their personal growth. To validate the above findings and finding the way forward, the next step is to address the analysis from the results of the four themes that emerged. The findings from the first theme of talent attraction were to identify and understand the processes of attracting new hires. It was discovered that employees were more attracted to non-monetary incentives compared to monetary incentives. The findings showed the lack of career development is one of the major reasons that employees leave their jobs. In the findings, respondents stated the lack of growth opportunities within administration although the details were not given professionally of exit interviews. Findings noted was increased turnover in the past few years because of burnout and non-monetary incentives offered by other institutions that NUST could not match and now calls for solutions to remain competitive and retain key talent.

The major theme of employee turnover attracted job satisfaction as the sub-theme and findings revealed that employees suffered from job dissatisfaction. The findings suggest that managers do not pay sufficient attention to the performance of employees and ignore the importance of job satisfaction. The study discovered that performance will be emphasised by developing a performance management tool at NUST. The findings concluded that the institution should manage its performance management to strengthen its capabilities and competitiveness in the operating environment. The results of performance management provide a basis for self-development and in TM to ensure the support and guidance that people need to develop and improve.

Practical implications

The findings of this study have important implications for the employers, especially those in the education industry, and the advancement of knowledge in managing and retaining HIPO employees at the institution. The findings of this study help the line and HRM managers in developing and implementing successful TM practices that would help align the core objectives of the institution. The institution should develop retention strategies based on the needs of its top talents and control the strengths that the institutional culture encourages and provides. This allows the institution to have a competitive advantage against other competitors by developing a TM strategy that would be consistent and efficient simultaneously. This study will also provide a vision to the institution as to how TM influences employee retention, so the institution can improve in developing, promoting and retaining talent to meet the existing and future needs.

As compensation of non-monetary incentives, career development, job satisfaction and performance management had the most significance, the institution should pay much attention to these four factors to keep the employee with the institution for a longer time. Line management must assume responsibility and accountability for the outcomes of managing talent in their respective units and departments. Constant communication and feedback are to be carried out continuously by direct management with the employees in a professional, open and honest manner. Finally, the study would also enable us to promote transparency amongst the management and employees in increasing their performance and indirectly help the institution to increase their productivity and ultimately lead to institution profit. The recommended practices for this study will offer the direction to higher educational institutions in determining which of the TM strategies are more effective to retain employees and what urges them to stay and work with the institution on a long-term basis.

Limitations and recommendations

Many interviews were performed via Phone, Zoom or Teams. This limitation was because of the international outbreak of COVID-19 that led to the country’s partial lockdown. The interventions were very strict because of the nature of spreading of the virus and thus led to social distancing and restricted travelling. Many respondents were not willing to risk attracting the virus. The challenge was also that respondents were not willing to provide the completely frank information as regard to the sensitivity of the study subject as they feared victimisation from top management. Another limitation was the lack of reliable responses as some of the data were recorded with cell phones, especially the ones gathered via the Phone app, and thus limited the research and analysis on some questions pertaining to this study.

Regarding empirical knowledge expansion, the study recommends to organisations and/or institutions wishing to restrict the drain of talent, increase job satisfaction to have well-motivated and effective employees and create better business results need to take practical steps to address these challenges. The strategies should increase the value of the organisation and preserve its sustainable competitive advantage.

Regarding organisational recommendations, the following should be practiced by NUST:

• Policymakers should revise and improve the HRM policies, including their TM and retention policy, as HRM policies directly influence employees’ working conditions.

• Implementation and correct application of talent retention strategies by applying the hierarchy of needs theory to understand employees’ needs in the institution by predicting the actions and behaviours of employees under different situations.

• Creating proper rewarding structure to enhance job satisfaction and therefore retention that may include fair benefits from the employee rebate systems for all employees and at all levels.

• Introducing a 360-degree performance appraisal method built in the new developed performance management tool and trying to tap from internal talent pool before a vacancy is advertised to the public.

• Creating an insignificant incentive approach.

Conclusion

The Namibia University of Science and Technology has embraced the development of TM combined with the performance management tool as part of its HRM management operations and practices. From the findings and discussion, majority TM practices that were found to have been adopted by the institution have a relationship with employee retention. Talent management practices to a greater extent determine employee retention; NUST needs to develop other practices such as knowledge management, health and safety and also employee engagement. This research study also established that successful TM is driven by a talent mind-set in which managers in the institution regard TM as their responsibility and not the sole responsibility of the HRM department. Failing to retain high-performing employees in NUST is costly just as for any other organisation because of costs associated with high turnover. Talent management practices can facilitate the development of employees, enhance service delivery and also give NUST an enhanced group image.

ERP Systems: Breaking Down Organizational Readiness and Sustainability Considerations for Implementation

Trish Nguyen from TPG

"If employees don’t feel like the leadership team is behind a transformation, they are not going to be either. This is essential for the change management of implementing an ERP or any other system into an organization and have it be successful over the long term"

What is an ERP and why might an organization need one? How can it make someone’s life/job easier?

An ERP is enterprise resource planning. It’s essentially an integrated management system of a company’s main business processes, through software and technology. Typically, it’s a suite of applications that are integrated or modules that an organization uses to collect, manage, store and use the data for their business activities.

It makes somebody’s life or job easier because it’s designed to track business resources such as cash or materials or production capabilities. And then they balance that out with business commitments. The data from purchase orders, HR, payables and more, is shared across departments, making it a single source of the truth in real-time. This makes all department functions work seamlessly together.

Are there any key considerations that a company should think about before implementing an ERP system? Are there any cautions or pitfalls that are common?

1. Buy-in from leadership

The leadership team must have a willingness to champion the integration, build that organizational support. If employees don’t feel like the leadership team is behind a transformation, they are not going to be either. This is essential for the change management of implementing an ERP or any other system into an organization and have it be successful over the long term.

2. Understanding of the organization’s business process requirements

Before implementing an ERP, companies need to know what the current state of their existing processes is, including how mature they are and how much mature documentation exists around those processes. From a finance perspective, understanding the critical reporting elements and what the information system needs to provide.

3. Clean data

Having clean data, and having a good plan in place to be able to migrate the good data into an ERP is critical. The system is only as good as its data. Does the company have the right team and competencies to undertake an integration? What gaps exist? And what mitigation plan is being put in place?

4. Capacity

Does the organization have enough capacity to undertake the integration? Do your people have the bandwidth to undertake this (and the necessary training hours that come with it) on top of their existing jobs?

How has an integrated ERP system evolved and how will it continue to evolve in a virtual / post-COVID-19 world?

Any system through this pandemic must support increased collaboration. A lot of companies are still on traditional hardware-based ERPs, while some have moved to cloud-based platforms. For those with older systems, when work-from-home orders began in March of 2020, there was a scramble to get new technology integrated to enable remote working. In 2021 and beyond, it is likely that organizations will continue to place more importance on making sure their employee can access everything online.

What trends or innovations are emerging in the space right now. Are there any opportunities that companies should be taking advantage of?

1. Increased use of cloud-based systems

As mentioned above,  one of the benefits of internet-based systems is the accessibility of real-time data and up-to-date software. Any time there is an update or upgrade, it is automatic across the company. This also makes it a lot easier to integrate with other applications. With this, companies will continue to look into what they can integrate together, to make their systems easier to use.

2. Demand for niche systems

There’s a growing demand for more niche solutions to optimize processes for both businesses and vendors. ERP systems started with the big guys (i.e. Oracle, SAP etc.). Now, companies are looking for ERPS that specifically serve their industry or niche business needs with features and functionalities that companies operating in this niche market would use. It’s no longer a generic software.

3.AI Integration

Companies are facing an increase in the number of complex and unstructured data that they’re collecting and that they’re having to analyze. Integrating an ERP with some sort of artificial intelligence platform makes it a lot easier to process that information.

Optimizing Accounts Payable (AP) Processes to Free up Cash

Jennifer Phan from The Poirier Group

"Processing invoices may seem quite simple and easy from receiving the invoice to issuing payment. However, there are often many manual tasks that are performed behind the scenes. These manual tasks include invoice data entry, scanning invoices, following up with approvals, providing payment updates/remittances and mailing cheques which often causes bottlenecks."

Why is optimizing AP processes so important for a company’s ability to free up cash and strengthen its working capital?

Optimizing AP processes is often not on many organizations’ list of priorities. As it is a back-office function, the importance of improving AP processes is often overlooked. In theory, if a business simply delays invoice payments to the last possible date, this will allow the business to have more cash on hand to maximize free cash flow. However, with this approach, the business will put themselves at risk of service/delivery delays, late payment charges, and will build a poor relationship with suppliers which will indirectly impact the business down the road.

Businesses need to optimize AP processes as it will help free up cash and strengthen working capital. If optimized, this will allow businesses to fund growth and build shareholder value. With an optimized AP process, there are structured processes in place so that invoices are received and processed within a timely manner. However, as part of this process, management must emphasize the importance of optimizing work capital in its culture as it involves collaboration within the whole organization from submitting POs, receiving invoices, and reviewing/approving invoices to processing payment for the invoice.

What are the main activities to optimize to improve accounts payable processing and reduce bottlenecks? How can automation help?

With the advanced technology that we have today, we would always see efficiencies with automation.

Processing invoices may seem quite simple and easy from receiving the invoice to issuing payment. However, there are often many manual tasks that are performed behind the scenes. These manual tasks include invoice data entry, scanning invoices, following up with approvals, providing payment updates/remittances and mailing cheques (just to name a few) which often causes bottlenecks. In essence, the more manual tasks that are involved in the AP process, the more bottlenecks and human errors occur.

A great way to reduce bottlenecks is to use AP automation software. Tasks such as scanning invoices, entering invoice data, matching invoices against PO, and routing invoices for approvals can all be automated. This will greatly reduce invoice processing time and human errors while freeing up time from repeatable tasks to reallocate to value-add tasks.

How can you select and negotiate with vendors to create favourable buying terms? (i.e customer service quality, payment terms, price etc.)

During the vendor negotiation process, always negotiate for longer payment terms or early payment discounts to save costs or free up cash flow. It helps to utilize a vendor evaluation and selection matrix (or a decision matrix) to compare different vendor pricing and offerings to help with the decision process. This matrix can be leveraged during the negotiation process to induce suppliers for better pricing/payment terms and services.

What are some best practices companies can adopt to create both quick wins and long-term results?

Go paperless!

There are many options for electronic payment nowadays. Companies should move away from issuing cheque payments and transition to the different forms of electronic payments available today. When companies issue cheque payments, it requires a lot of admin work. The cheque needs to be issued, signed off and then mailed out (which often time takes 3-5 days to arrive at the destination). If the cheque is stale dated it needs to be re-issued and if it gets lost in the mail a stop payment needs to be processed. All of this admin work can be eliminated if businesses move towards electronic payments. With electronic payments, payments are made quicker, it is more secured and it does not require as much admin work.

Create and manage an AP workflow

Proper management of AP workflows is very important. Oftentimes, particularly near month-end, quarter-end, or year-end closing, there are high volumes of invoices that need to be posted before the books are closed. Without a proper workflow in place, it is common to see a backlog of invoices in the queue pending approvals which can cause delays or often an oversight in approvals due to the high volume of invoices that needs to be reviewed.

Creating Efficiency Through Roles and Responsibilities Alignment

Moe Hammad

"When the leadership team is presented as a unified front, a change can come together, and it can bring disparate teams together."

Can You Describe the Importance of Having Properly Aligned Roles and Responsibilities within an Organization and/or Project Team? 

Aligning on roles and responsibilities is important especially in a complex matrix organization where there are lots of people working on a lot of different things, in different departments. As organizations grow, teams start to migrate into their own silos and what used to work in a small team sometimes doesn’t scale to a larger team. This creates unnecessary handoffs, dissatisfaction, inefficiencies, and lost economies of scale.

Occasionally at different parts of an organization’s growth cycle, it’s important to re-evaluate the goals, strategies and focuses of the company and re-align the roles, responsibilities and interactions of the teams. Start by asking the following questions:

• What’s the vision or goal for each functional group?

• How do they interact with each other?

• How are those strategic goals and day-to-day goals filtered down from the heads of the functional groups to the working groups?

• How do those working groups work with each other?

Oftentimes, the leadership at the top thinks things are going fine, but from the perspective of the analysts and mid-level managers, there are role misalignments shown through duplicated work, or two departments thinking that they own something. That leads to a lot of inefficiencies and wasted time spent doing lower-value tasks in favour of higher value ones that better contribute to the organization’s strategic goals.

How Do You Support Change Management and Communication Functions When Rolling out New Roles and Responsibilities Assignments to a Large Organization? How do you Mitigate Risks?

Change management is crucial with any roles and responsibilities change. Some academic models address this pretty extensively, but what impacts the success of any large change is rallying the group around a shared vision.

The entire team needs to be clear on what the vision or the goal is behind this change, and why something is changing. Getting the team clear and aligned on these two factors will help in eliminating a lot of the hesitation or doubt that that might come up in the process.

In terms of communication, integrating that new communication into the pre-existing day-to-day communication that happens naturally within teams is one of the best ways to get a new message out. For that to work, it’s essential to have change leaders and supporters within the team who are going to be champions for that change across the team.

While there are tools and academic models that exist to help companies through this, it’s important not to solely rely on them because many people will not connect or resonate with an academic or technical model. Instead, integrate the goals of the change into the language that the organization uses day-to-day. That way, it feels as natural as possible to the employees and is something that they’re comfortable using.

How Does an Aligned (or Misaligned) Team Affect the Speed and Effectiveness of Decision Making and Communication? What Are Some Best Practices?

Decision Making

In organizations that are misaligned, every decision or a lot of decisions that are critical for the day-to-day are stuck in approval loops, which are much higher than they need to be. While there are finance and accounting concerns that need to be taken into account, operationally day-to-day these decisions need to be made much quicker.

One of the key ways in which roles and responsibilities alignment increase the speed and effectiveness of decision making is to keep those approval loops at the appropriate level or eliminate them completely. They would be replaced with regular reviews of those decisions and their results to continue to have a pulse on the outcomes of those decisions, but be less hindering to the productivity and speed of those decisions.

Communication

The speed of communication is one aspect of efficiency in roles and responsibilities alignment. Typically, we see processes that happen daily, weekly or quarterly that weave their way through several employees and even departments.  At each of those handoff points, you have to wait for the other employee to move the process along. Each additional handoff in the process creates friction in communication and reduces the speed of that process. Even more so when there are vague expectations set on due dates for deliverables or who is responsible for what.

Realigning those roles and responsibilities can reduce handoffs between departments, and improve the clarity of expectations, which improves speed and effectiveness of communication.

Best Practices to Create Team Alignment

First, the leadership team needs to align on a vision and the values for this change (i.e. what’s the vision for the final result and what was the reason for this change?). When the leadership team is presented as a unified front, a change can come together, and it can bring disparate teams together. 

Second, any vision for an organizational change affecting multiple people and departments needs to be communicated internally from the leadership team rather than imposed externally.

How the GCC can become a force in global green hydrogen

PWC

Executive summary

The rapid shift to green hydrogen presents Gulf Cooperation Council (GCC)1 countries with an opportunity to play a leading role in this new industry. Green hydrogen could become a major and versatile power source of the decarbonized future. The GCC holds significant advantages in the production of green hydrogen, due to abundant, low-cost solar energy. However, green hydrogen entails significant transportation costs to supply large export markets in Europe and East Asia. For that reason, the green hydrogen market will be won in the supply chain. The best way for GCC producers to supply large export markets is to use renewable energy to convert green hydrogen to green ammonia (NH3 , an effective hydrogen-carrying compound). GCC producers would then “crack” the ammonia at the export destination to extract the hydrogen for end use.

The green hydrogen economy is challenging, and will entail a new ecosystem with unique requirements and many unsettled elements. Although technically proven, green ammonia production is not yet operating at industrial levels; however, with several large-scale demonstrator projects currently under way, commercialization is imminent. At the other end of the supply chain, ammonia “cracking” technology still requires further development to extract high-purity hydrogen cost effectively at the volumes required.

To succeed, GCC countries must focus on policy imperatives over the next three to five years, in areas such as developing a national strategy; establishing the business case; launching pilot projects; and creating a supportive policy, regulatory, and investment framework. Longer term, GCC producers will have four strategic priorities to achieve scale advantages at all stages of the green ammonia value chain, encompassing production, conversion, transportation, reconversion through cracking, and delivery.

A critical component of the decarbonization agenda

The market for green hydrogen is moving swiftly from what seemed like a future hypothetical to an extremely promising reality in which the GCC could play a leading role. Hydrogen is abundant, environmentally sustainable, energy-dense, and when produced through renewable energy is “green” — making it a critical part of the decarbonization agenda. Rapid scale and technology improvements mean that green hydrogen production costs are expected to fall sharply in the next decade, with cheaper renewable energy making an important contribution. Based on these trends, green hydrogen will likely reach a turning point in terms of adoption around 2030. By 2050, global green hydrogen demand is expected to reach over 530 million tons, equivalent to around 7 percent of global primary energy consumption.2 This would displace 10 billion barrels of oil equivalent per year, around 37 percent of current global oil production.
At the same time, the applications for green hydrogen are growing far beyond existing uses such as feedstock for industrial processes. Over the long term, green hydrogen will become a major and versatile power source of the decarbonized future, whether powering passenger vehicles, industrial processes, or commercial transport. The transition will likely be led initially by transport applications in high-utilization and larger vehicle categories in which the total cost of ownership compared to vehicles running on hydrocarbons looks most compelling (see “The economics of hydrogen fuel cell electric vehicles”). Hydrogen-blending solutions in building heat and power also hold potential. Moreover, a full switchover from natural gas would unlock significant demand in areas such as industrial energy, industrial feedstock, and power system applications.

The economics of hydrogen fuel cell electric vehicles

Green hydrogen is triggering a fundamental shake-up in the transportation industry through the emergence of hydrogen fuel cell electric vehicles (FCEVs) — rivalling traditional internal combustion engine vehicles (ICEVs) and battery-powered electric vehicles (BEVs).

Generally speaking, FCEV technology has cost advantages over BEV technology for vehicle categories that have high utilization, require longer daily driving distances, or that are typically larger and heavier in size — such as trucks and buses, taxi fleets, and even forklifts. The combination of limited driving range, lengthy battery recharging time, and the extra weight, size, and complexity of the BEV battery pack for larger, heavier vehicles results in superior FCEV economics in these categories. In Germany, for example, FCEVs in the truck category are already more competitive than BEVs in terms of their total cost of ownership, and will be 30 percent more cost effective by 2030.

The market for passenger cars is equally promising, with FCEVs forecasted to surpass ICEVs by 2029 in terms of their total cost of ownership. Toyota is planning production of around 200,000 FCEV vehicles per year by 2025 and is targeting in excess of 500,000 units per year by 2030, with Hyundai aiming for 110,000 per year by 2025.3 These commitments will dramatically reduce FCEV costs, due to mass-market adoption. There are questions as to whether FCEVs or BEVs ultimately will dominate the passenger vehicle market. However, it is already clear that the era of ICEVs is ending.

Conclusion

Although many countries have ambitious plans for green hydrogen, the GCC states have unique advantages that could allow them to lead the hydrogen economy. They also have an incentive to move away from fossil fuels. By seizing the green hydrogen opportunity, GCC countries can lay the foundation for economic growth in a decarbonized world and ensure their continued influence in the energy market.

Overview and growth of India’s connectivity market

PWC

With more than half a billion internet subscribers, India is one of the largest and fastest growing markets for digital consumers. This rapid growth has been propelled by both the public and private sector. For many people in India today, it is easier to have access to a mobile phone than to basic services such as public transport. As a result, the country has seen exponential growth in data generation.
India’s digital surge1 is well noted on the consumer side, even as its businesses have started to adopt ICT technologies such as cloud computing. As a result, the needs of various industry sectors have evolved. The highest demand for connecting data centres through long-haul, trans-oceanic, underground and pipeline cables to enable high-performance connectivity and computing is from the technologically most advanced banking, financial services and insurance (BFSI) sector and the IT and telecom sectors. Government projects such as BharatNet and the National Smart Cities Mission, where schools, hospitals and public security systems will have interconnected services, need passive optical network solutions. Multiple over-the-top (OTT) applications and cable TV operators need fibre-to-the-home connectivity for high-speed content streaming. Additionally, the recent pandemic and ensuing lockdowns have led to greater awareness of the need to be equipped for remote working, which may become a long-term requirement across many organisations.
As a result, data consumption in India is estimated to grow to 100 million terabytes by 2022.2 This data will be stored in a distributed ecosystem of multiple devices and data centres. Consumer preferences in terms of data consumption and the industry push for cloudification hence require significant growth in high-bandwidth and (in some instances) low-latency connectivity.
This growth in data consumption will impose capacity constraints on service providers (e.g. OTT and telecom players), even as the growing number of new-age digitally enabled enterprises demand higher capacity. As a result, the focus will shift to connectivity solutions on Layer 2 and Layer 3 of the Open Systems Interconnection (OSI) model. Layer 2 primarily consists of Ethernet, domestic leased circuit (DLC), international private leased circuit (PLC), etc. Layer 3 primarily comprises multi-protocol label switching (MPLS), software-defined networking in a wide area network (SD-WAN; sometimes also called Layer 2.5), and alternatives such as internet leased line.

The value of value creation

McKinsey Quarterly By Marc Goedhart and Tim Koller

Long-term value creation can—and should—take into account the interests of all stakeholders

Challenges such as globalization, climate change, income inequality, and the growing power of technology titans have shaken public confidence in large corporations. In an annual Gallup poll, more than one in three of those surveyed express little or no confidence in big business—seven percentage points worse than two decades ago.1 Politicians and commentators push for more regulation and fundamental changes in corporate governance. Some have gone so far as to argue that “capitalism is destroying the earth.”2

This is hardly the first time that the system in which value creation takes place has come under fire. At the turn of the 20th century in the United States, fears about the growing power of business combinations raised questions that led to more rigorous enforcement of antitrust laws. The Great Depression of the 1930s was another such moment, when prolonged unemployment undermined confidence in the ability of the capitalist system to mobilize resources, leading to a range of new policies in democracies around the world.

Today’s critique includes a call on companies to include a broader set of stakeholders in their decision making, beyond just their shareholders. It’s a view that has long been influential in continental Europe, where it is frequently embedded in corporate-governance structures. The approach is gaining traction in the United States, as well, with the emergence of public-benefit corporations, which explicitly empower directors to take into account the interests of constituencies other than shareholders.

Particularly at this time of reflection on the virtues and vices of capitalism, we believe it’s critical that managers and board directors have a clear understanding of what value creation means. For today’s value-minded executives, creating value cannot be limited to simply maximizing today’s share price. Rather, the evidence points to a better objective: maximizing a company’s value to its shareholders, now and in the future.

Section 1: Answering society’s call

Recently, the US Business Roundtable released its 2019 “Statement on the purpose of a corporation.” Dozens of business leaders (the managing director of McKinsey among them) declared “a fundamental commitment to all of our stakeholders [emphasis in the original].” Signatories affirmed that their companies have a responsibility to customers, employees, suppliers, communities (including the physical environment), and shareholders. “We commit to deliver value to all of them,” the statement concludes, “for the future success of our companies, our communities and our country.”

A focus on the future

The Business Roundtable’s focus on the future is no accident: issues such as climate change and income inequality have raised concerns that today’s global economic system is shortchanging the future. We agree. The chief culprit, however, is not long-term value creation but its antithesis: short-termism. Managers and investors alike too often fixate on short-term performance metrics, particularly earnings per share, rather than on the creation of value over the long term. By prioritizing (or, perhaps more correctly, mischaracterizing) shareholders’ best interests in terms of beating analyst estimates on near-term quarterly earnings, the financial system can seem to institutionalize a model that cares only for today and all but ignores tomorrow. There also is evidence, including the median scores of companies tracked by McKinsey’s Corporate Horizon Index from 1999 to 2017, that the tendency toward short-termism has been on the rise. Certainly, the roots of short-termism are deep and intertwined. A collective commitment of business leaders to clear the weeds and cultivate future value is therefore highly encouraging.

Companies that conflate short-termism with value creation often put both shareholder value and stakeholder interests at risk. Banks that confused the two in the first decade of this century precipitated a financial crisis that ultimately destroyed billions of dollars of shareholder value. Companies whose short-term focus leads to environmental disasters also destroy shareholder value, not just directly through cleanup costs and fines but via lingering reputational damage. The best managers don’t skimp on safety, don’t make value-destroying decisions just because their peers are doing so, and don’t use accounting or financial gimmicks to boost short-term profits. Such actions undermine the interests of shareholders and all stakeholders and are the antithesis of value creation.

Value creation is inclusive

For companies anywhere in the world, creating long-term shareholder value requires satisfying other stakeholders as well. You can’t create long-term value by ignoring the needs of your customers, suppliers, and employees. Investing for sustainable growth should and often does result in stronger economies, higher living standards, and more opportunities for individuals. It should not be surprising, then, that value-creating capitalism has served to catalyze progress, whether by lifting millions of people out of poverty, contributing to higher literacy rates, or fostering innovations that improve quality of life and lengthen life expectancy.

A strong environmental, social, and governance (ESG) proposition also creates shareholder value.3 For example, Alphabet’s free suite of tools for education, including Google Classroom, not only seeks to help equip teachers with resources to make their work easier and more productive, but it can also familiarize students around the world with Google applications—especially those in underserved communities who might otherwise not have access to meaningful computer engagement at all. Nor is Alphabet reticent about choosing not to do business in instances that it deems harmful to vulnerable populations; the Google Play app store now prohibits apps for personal loans with exorbitant annual percentage rates, an all-too-common feature of predatory payday loans.

Similarly, Lego’s mission to “play well”—to use the power of play to inspire “the builders of tomorrow, their environment and communities”—has led to a program that unites dozens of children in rural China with their working parents. Programs such as these no doubt play a role in burnishing Lego’s brand throughout communities and within company walls, where, it reports, employee motivation and satisfaction levels beat 2018 targets by 50 percent. Or take Sodexo’s efforts to encourage gender balance among managers. Sodexo says the program has increased the retention of not only employees, by 8 percent, but also clients, by 9 percent, and boosted operating margins by 8 percent as well.5

Section 2: Shareholders and stakeholders: A balanced approach

Inevitably, there will also be times when the interests of all of a company’s stakeholders are not complementary. Strategic decisions of all kinds involve myriad trade-offs, and the reality is that the interests of different groups can be at odds with one another. Implicit in the Business Roundtable’s 2019 statement of purpose is concern that business leaders have skewed some of their decisions too much toward the interests of shareholders.

Stakeholders for the long term

Time will tell how they act on this conviction. As a starting point, we’d encourage leaders, when there are trade-offs to be made, to prioritize long-term value creation, given the advantages it holds for resource allocation and economic health. Consider employee stakeholders. A company that tries to boost profits by providing a shabby work environment, underpaying employees, or skimping on benefits will have trouble attracting and retaining high-quality employees. Lower-quality employees can mean lower-quality products, reduced demand, and damage to the brand reputation.

More injury and illness can invite regulatory scrutiny and more union pressure. Higher turnover will inevitably increase training costs. With today’s mobile and educated workforce, such a company will struggle in the long term against competitors offering more attractive environments. If the company earns more than its cost of capital, it might afford to pay above-market wages and still prosper, and treating employees well can be good business.

How well is well enough? A long-term value-creation focus suggests paying wages that are sufficient to attract quality employees and keep them happy and productive and pairing those wages with a range of nonmonetary benefits and rewards. Even companies that have shifted manufacturing of products such as clothing and textiles to low-cost countries with weak labor protection have found that they need to monitor the working conditions of their suppliers or face a consumer backlash.

Or consider how high a price a company should charge for its products. A long-term approach would weigh price, volume, and customer satisfaction to determine a price that creates sustainable value. That price would have to entice consumers to buy the products—not just once, but multiple times, for different generations of products. The company might still thrive at a lower price point, but there’s no way to determine whether the value of a lower price is greater for consumers than the value of a higher price to shareholders, and indeed to all corporate stakeholders, without taking a long-term view.

Social consequences

Far more often, the lines are gray, not black or white. Companies in mature, competitive industries, for example, grapple with whether they should keep open high-cost plants that lose money, just to keep employees working and prevent suppliers from going bankrupt. To do so in a globalizing industry would distort the allocation of resources in the economy, notwithstanding the significant short-term local costs associated with plant closures. At the same time, politicians on both sides of the aisle pressure companies to keep failing plants open. Sometimes, the government is also a major customer of the company’s products or services.

In our experience, managers not only carefully weigh bottom-line impact but also agonize over decisions that have pronounced consequences on workers’ lives and community well-being. But consumers benefit when goods are produced at the lowest possible cost, and the economy benefits when operations that have become a drain on public resources are closed and employees move to new jobs with more competitive companies. And while it’s true that employees often can’t just pick up and relocate, it’s also true that value-creating companies create more jobs. When examining employment, we found that the US and European companies that created the most shareholder value in the past 15 years have shown stronger employment growth (exhibit).

Section 3: Value creation is not a magic wand

Long-term value creation historically has been a massive force for public good, just as short-termism has proved to be a scourge. But short-termism isn’t the only source for today’s sense of crisis. Imagine, in fact, that short-termism were magically cured. Would other foundational problems suddenly disappear as well? Of course not. There are many trade-offs that company managers struggle to make, in which neither a shareholder nor a stakeholder approach offers a clear path forward. This is especially true when it comes to issues affecting people who aren’t immediately involved with the company. These so-called externalities—perhaps most prominently, a company’s carbon emissions affecting parties that otherwise have no direct contact with the company—can be extremely challenging for corporate decision making because there is no objective basis for making trade-offs among parties.

That’s not to say that business leaders should just dismiss the problem of externalities as unsolvable, or something to be solved on a distant day. Punting is the essence of short-termism. With respect to the climate, some of the largest energy companies in the world, including BP and Shell, are taking bold measures right now toward carbon reduction, including tying executive compensation to emissions targets.

Still, the complexity is obvious for any individual company striving to comprehensively solve global threats such as climate change that will affect so many people, now and in the future. That places bigger demands on governments and investors. Governments can create incentives, regulations, and taxes that encourage a migration away from polluting sources of energy. Ideally, such approaches would work in harmony with market-oriented approaches, allowing creative destruction to replace aging technologies and systems with cleaner and more efficient sources of power. This trading off of different economic interests and time horizons is precisely what people charge their governments to do.

Institutional investors such as pension funds, as stewards of the millions of men and women whose financial futures are often at stake, can also play a critical supporting role. In the case of climate change, longer-term investors concerned with environmental issues such as carbon emissions, water scarcity, and land degradation are connecting value and long-term sustainability. Indeed, investor scrutiny has been increasing. Long-term-oriented companies must be attuned to long-term changes that will be demanded by both investors and governments, so that they can adjust their strategies over a five-, ten-, or 20-year time horizon and reduce the risk of stranded assets, or those that are still productive but not in use because of environmental or other issues.

Unfortunately, governments and long-term investors don’t always play their roles effectively. Breakdowns can lead to divergences between shareholder value creation and the impact of externalities. Failure to price or control for externalities will also lead to a misallocation of resources. Those effects can create new stresses, and sometimes outright divisions, between shareholders and other stakeholders.

Yet as the Business Roundtable statement affirms, the interests of shareholders and stakeholders can go hand in hand. Businesses make a vital contribution by creating value for the long term. Doing so in a sustainable manner calls for meeting the concerns of communities (including the environment), consumers, employees, suppliers, and shareholders alike. A short-term focus necessarily shortchanges some or all of these constituencies. A long-term commitment toward value creation, by contrast, almost axiomatically takes a broad range of constituent interests into account. Of course, it’s not the cure for all social ills (beware of anything that purports to be!), but a commitment to long-term value creation is something worth valuing indeed.

ABOUT THE AUTHOR(S)

Marc Goedhart is a senior knowledge expert in McKinsey’s Amsterdam office, and Tim Koller is a partner in the Stamford office. They are coauthors, along with David Wessels, of Valuation: Measuring and Managing the Value of Companies, seventh edition (John Wiley & Sons, 2020), from which this article is adapted.

The Philippines Growth Dialogues

Mckinsey&Comapny

The Philippines is poised for more of the economic growth it has experienced in recent years. In this collection, cross-sector leaders discuss how it can solidify its place as a global economic force.

Over the past decade, the Philippines has experienced exponential economic growth and is currently poised for increased momentum. The Philippines Growth Dialogues is a collection of conversations we have had with CEOs, entrepreneurs and technology leaders to identify opportunities for the country to solidify its place as a global economic force. Many of the conversations predate the pandemic, but they remain relevant and vital—perhaps more vital than ever.

The COVID-19 pandemic will be remembered not just for the massive impact on lives and livelihoods around the world, but also as a major inflection point in how people live, work, and consume. The outlines of the next normal are crystalizing into view, yet much remains to be written. What is certain is that the economic future in the Philippines will belong to the Filipino business leaders who can best anticipate changing demands from consumers, the wider public, and their own employees to drive innovation and growth.

The sweet spot is likely to lie where the transformative power of global trends—especially those that have been accelerated by the COVID-19 crisis—overlap with the unique economic, geographic, and social characteristics that shaped the country’s growth. Those forces have remained resilient throughout the pandemic and will continue to be important.

For instance, it’s well known that Filipinos are early adopters of technology. The conversations in the Philippines Growth Dialogues explore how technology and innovation will continue to shape the future, such as digital disruption in retail helping the next generation of entrepreneurs create and deliver new products and services in response to rapidly-evolving consumer tastes.

Yet the conversations also describe how Philippine companies have not yet fully embraced the ways in which technology can help them realize their full potential. With the COVID-19 pandemic driving an increasing number of consumers online, digital trends are supercharged. That’s creating enormous opportunities for Philippine companies that can leverage advances in technology to respond to changes in behavior to solve problems that are unique to the country.

Inclusiveness and opportunity remain key challenges. The middle class in the Philippines is growing fast, in part on the back of business-process outsourcing (BPO). A massive demographic dividend awaits as the country’s youth matures, but prosperity has not been evenly shared. Philippine businesses that can bring more people into the banking system or open access to education, healthcare, and jobs across the archipelago’s 7,600 islands will surge ahead.

With massive investment planned across the Philippines in everything from services to transport and urban infrastructure, the time is ripe for innovators to build their businesses as they continue building the country. The COVID-19 crisis has created an environment for businesses and governments that has never been more challenging—but that also means that the future starts now.

This anthology is a living document and we will update it as our conversations with local leaders forge new growth paths and shape a new normal for the Philippines.

COVID-19 has created a challenging environment for businesses and governments, but it also means the future starts now for leaders bold enough to overcome it.

Meet your future Asian consumer

Mckinsey&Company

Asia’s consumer markets are not only a story of scale, but also one of diversity and shifting preferences and behavior caused by powerful demographic, social, and economic forces.

Half of the world’s spending growth will come from Asia over the next decade, but do we really know Asia’s consumers? This kaleidoscope of consumers in this highly diverse regional economy—the fastest growing in the world—offers a $10 trillion consumption growth opportunity between now and 2030. Meet the Asian consumer in this series of charts.

Don’t miss more than half the world’s consumption story over the next decade: Asia

Asian consumers are expected to account for half of global consumption growth in the next decade, offering a $10 trillion consumption growth opportunity. Globally, one of every two upper-middle-income and above households is expected to be in Asia, and one of every two transactions to be made by consumers in the region. Strong prospects for consumption in the region reflect falling rates of poverty and rising incomes and spending power. Capturing this growth will require understanding the region’s diversity and rapidly changing consumer behaviors. Companies will need to acquaint themselves with Japanese Insta-grannies, Indonesian Generation Z gamers, Indian small shop owners, Chinese lifestyle-indulging millennials, and others.

Consumers in Asia opt for Asian platforms and influencers

Asian consumers are increasingly online and mobile first across age groups, from members of Generation Z voraciously consuming video content to the more than 90 percent of seniors in Japan and South Korea expected to be online by 2030. But what platforms, influencers, and payment methods do Asian consumers prefer? Asian platforms are gaining prominence and crossing borders. However, there is still no single playbook in the region, and companies will need to adjust their digital footprint to local markets. Asia’s digital generation tends to use non-Asian social-media platforms, but largely follow local social-media influencers. They use Asian e-commerce platforms and local digital payments providers. Within this broad picture, however, there are significant variations. Chinese consumers largely adopt local platforms, while Australian consumers tend to use non-Asian ones.

Israeli Electronic Weapons: Invisible Cloak

Strategic Frontier Technology

July 11, 2021: In mid-2021, an Israeli company (Polaris) launched Kit 300, which is a new MCS (Multispectral Camouflage System) cloth that counters the detection of thermal, infrared or radar equipment More practical and effective. The Polaris team said that the Israel Defense Forces (Israel Defense Forces) have conducted tests in operations and found it to be effective enough. Polaris is one of those defense companies that hired former Israeli Defense Forces special forces to join the team that developed Kit 300 and ensure that new products meet actual needs. In this case, since Lebanon started the war with Hezbollah in 2006, Israeli companies have been trying to develop an MCS material for vehicles and ground forces to neutralize heat detectors like Hezbollah’s 2006 use. For more than a decade, Islamic terrorists have been using night vision equipment obtained from the black market, which shows that the West needs something similar to MCS.

The heat detector is an infantry night vision device that has existed since the 1960s. These portable devices were first equipped with American soldiers in the 1960s, allowing troops to see more clearly than the enemy in moonlight or starlight. In the following decades, these devices became smaller, lighter, and more powerful.

In the ten years after 2001, progress has been faster and more revolutionary. By 2012, lightweight (infantry) night vision equipment uses digital optical amplification technology. The previous optical amplification was analog. But as a digital device, you will get more magnification (up to 300 times). Through the software, you can see a blurred image or quickly adjust the magnification of the device, and you can enter a lighted room from the dark without temporarily blindness. Digital images can be easily transmitted wirelessly. By 2014, the digital goggles weighed 680 gr (24 ounces) and were successfully used by SOCOM troops. The new digital light enhancement technology works well with the existing thermal (thermal) imaging technology. It can quickly mix the data of the two and use helmet-mounted night vision equipment to generate more accurate images for soldiers.

In 2009 and 2011, the US Army began to accept helmet-mounted ENVG (enhanced night vision goggles). This is another major improvement: SENVG (spiral enhanced night vision goggles) appeared. The main improvement of SENVG is clearer, more true color images. The troops who tested them didn't want to abandon them. SENVG is more expensive, and the initial order is less than one thousand yuan. Since then, this has more than tripled, but SENVG has been allocated to the units that need them most.

Russia and China can use this technology, so the development of MCS materials that will hide vehicles and troops from detection by digital thermal sensors is now a priority. This is because thermal equipment looks for differences in heat. It has always been difficult to hide this, and Kit 300 MCS cloth does a better job than any earlier material. Improved MCS materials usually first appear on vehicles and are too heavy to be used by ground forces. It didn't take long for MCS manufacturers to develop a lighter version for the infantry.

For example, in 2017, the U.S. Army tested a new type of Swedish (Saab) MSC camouflage material that provided vehicles with unprecedented concealment. This is because SAAV MCS camouflage nets can be installed on specific types of vehicles, such as second skins, and provide protection when moving, even in combat. The United States and many other countries are looking for an MCS that provides this protection. Saab has sold $8 million worth of MCS to Canada, which has encouraged Americans to take a look.

In the 2017 test, Saab provided four sets of these nets for the Stryker wheeled armored vehicle at their expense, and the United States also followed them to conduct field tests in Europe. If the US military places a large enough order, Saab is willing to build an MCS manufacturing plant in the United States. The test found that Saab MCS is effective, but it is sufficient to justify the large order. Saab has already made some sales to Western countries, and more people are interested in trying it out.

This new generation of camouflage materials has evolved over decades to protect vehicles and mobile bases from the increasing use of infrared (thermal/thermal) sensors for aerial reconnaissance. The latest generation of MCS materials began to appear 15 years ago. After 2006, the United States purchased a large number of such materials. The new MCS net can shield infrared, thermal and radar sensors to a certain extent. Some new materials are used in vehicle soft tops, which have been found to provide a certain degree of protection. The combat uniform contains treated cloth to make it more difficult for thermal sensors to quickly spot soldiers in the dark.

Saab and Polaris went a step further and developed MCS cloth, which makes the effect of air or ground thermal sensors much lower. This may be a major advantage in combat, because getting the first accurate shot may be decisive. Saab MCS has a variety of camouflage patterns and colors, so vehicles can quickly "change their skin" to cope with the new climate or season. Israel Kit 300 is a step beyond this and provides invisible thermal, infrared and radar sensors. In addition, Israel and other MCS developers are working on new materials that will make troops and vehicles invisible to the naked eye, as well as multispectral sensors.

After 2006, people worry that because the basic invisible network is relatively cheap, it may be welcomed by Islamic terrorists and drug-trafficking groups in places such as Iraq and Afghanistan. The result will be that the enemy’s position will be more difficult to detect by airborne or satellite sensors. As we all know, the enemy's irregulars will obtain high-tech equipment, such as night vision or encrypted radio, and use them for their own benefit. Of course, if terrorists with commercial infrared sensors scan the hills one night, they will find that their equipment is less effective. They will not be able to spot the special forces team and hide under their new MSC camouflage net. This has not become a major issue in counter-terrorism operations. But the effectiveness of the new network is real.

How does the US government support technological innovation?

Strategic Frontier Technology

Technological innovation is a systematic project. Good industrial policies, accumulation of basic research, close cooperation between industry, university and research are indispensable. 

Ford Professor of Economics at MIT, Jonathan Gruber, Director of the Health Care Program of the National Bureau of Economic Research, and his partner Simon Johnson in the book "A Brief History of American Innovation", Industrial Policy on American Technological Innovation The changes have been interpreted, from which we can also see the course of the development of scientific and technological innovation in the United States.

To a certain extent, the "A Brief History of American Innovation" co-authored by MIT professors Jonathan Gruber and Simon Johnson is a prosperous alarm in times of peace.

The United States' technological innovation capability, technological strength, and educational strength have been leading the world for many years. In many fields of science and technology, such advantages have also become the killer of the United States in sanctions or restraining some companies in other countries. For the Chinese, the most memorable example is that the US government banned the sale of chips to Huawei. Huawei was hit hard as a result.
Even under such circumstances, "A Brief History of American Innovation" still sounded the alarm about the lack of funding for scientific innovation by the US government. Through this book, we can not only understand classic cases in the history of American innovation, but also learn more about the current problems of American innovation.

A brief history of American innovation

In this book, Jonathan Gruber, a Ford Professor of Economics at the Massachusetts Institute of Technology and Director of the Health Care Program at the National Bureau of Economic Research, combed through the important history of American innovation, expressed concern about the current situation, and raised concerns about the future. Provide concrete and feasible strategic support.

1. The government supports technological innovation, with pearls and jade first

From the perspective of R&D investment, the United States ranks first in the world. The comparative dimension of "A Brief History of American Innovation" is not to compare the United States with other countries in terms of the amount of investment, but to compare the amount of government funding for scientific innovation in the history of the United States and the proportion of GDP.

The Chinese have a familiar saying that science and technology are the primary productive forces, but many people may not really understand the path that science and technology promote economic development and improve national competitiveness. In this regard, this book starts from actual cases in the United States and makes a convincing explanation-in terms of factors that promote economic development, scientific innovation has a spillover effect, promotes further innovation, and creates numerous job opportunities. When a country takes the lead in the most critical industry, it can take the lead in the competition between countries.

In the view of Jonathan Gruber and Simon Johnson, the successful case of the U.S. government funding for scientific innovation is the funding of scientific innovation by the National Defense Research Council led by Vannevar Bush, the former vice president and head of the engineering department of the Massachusetts Institute of Technology. He made outstanding contributions to the victory of World War II and laid the foundation for the economic growth of the United States after World War II.

On June 12, 1940, Vannevar Bush visited the White House. He suggested to President Roosevelt the establishment of a National Defense Research Committee led by scientists and engineers to control the leadership and funding of new weapons research and development. Some industrial companies don't want private top research laboratories. Roosevelt approved this request.

The founding members of Bush’s Defense Research Council included Karl Compton, then Dean of the Massachusetts Institute of Technology, Harvard University President James Conant, and President of the National Academy of Sciences and Director of Bell Labs Frank B. Juvet, California Institute of Technology Richard C. Toroman, Dean of the Graduate School. The research fields of these scientific and technological elites involve atomic theory and some emerging concepts.

At its peak, Bush led 30,000 people, including 6,000 scientists, including about two-thirds of physicists in the United States. What followed was a sharp increase in scientific research funding. In 1938, the US federal government and state governments invested 0.076% of US national income in research funding; by 1944, this figure had risen to 0.5%. Most are spent from the National Defense Research Council.

In 1945, Bush prepared a report "Science: Endless Frontiers" for President Roosevelt. He pointed out that inventions and creations can save lives, improve the quality of life and create jobs; the government should not directly engage in scientific research, and the military's scientific bureaucratic command hinders science. Explore; companies, wealthy individuals, and first-class universities cannot solely undertake and carry out the scientific innovation and research needed by the country.

Bush proposed that the U.S. government continuously provide a large amount of funds to facilitate cooperation between universities and private enterprises to create "post-war innovation machines." In 1944, the "Veterans Rights Act" expanded university enrollment and trained many engineering and technical personnel. After the nascent industry has developed, many unprecedented jobs have been created. In the following 20 years, the salaries of American middle school graduates and college graduates have increased significantly. From 1940 to 1964, the federal government's investment in research and development increased by 20 times. In the heyday of the 1960s, this expenditure accounted for about 2% of GDP, which is roughly equivalent to today's 400 billion U.S. dollars.

On the other hand, during World War II, although the US government allocated a large amount of funds to the National Defense Research Council, the National Defense Research Council was composed and led by scientists and engineers. The bureaucracy of the US government (including the military) has no right to interfere in the work of these scientists and engineers. Decide. This approach has produced good results. The various scientific innovations promoted by the National Defense Research Council have made a significant contribution to the United States in winning the Second World War.

Looking back at the history of scientific innovation in the United States during this period, the special backgrounds such as World War II and the Cold War arms race are clearly "indispensable." They have become the best reason for the generous support of investors and the government's massive funding of scientific innovation. But from a methodological point of view, the special precedents during the Second World War may not be comparable.

Facts have also proved that with the reduction of government support, US technological innovation has gradually entered a low ebb.

2. Scientific innovation of U.S. private companies

The innovations of US private companies such as Microsoft, Apple, Amazon, and Google have hardly received any support from the government. They are entirely self-motivating within the companies for the purpose of competition and survival. A large number of privately supported laboratories at Stanford University, Massachusetts Institute of Technology, University of Washington, University of California, and Johns Hopkins University play a very important role in basic research in the United States.

These stories are already familiar to us, but scientific innovation in private companies has not been smooth sailing—at least from the perspective of the United States.

One of the wonderful stories is how the United States missed the liquid crystal display products and handed over to Japan in the 1960s.
In 1968, researchers from RCA held a press conference to showcase the world’s first commercial LCD display—this was the beginning of the liquid crystal display (LCD), and this project was quickly planned. Belongs to the semiconductor team that holds the patent of transistor cathode ray tube (RCT).

Perhaps because of concerns that the development of LCD technology will endanger the very successful and lucrative RCT TV business and the benefits of patent licenses, all research activities on LCD screens were forced to terminate. This decision happened to give the rising Japan an excellent opportunity.

It was in this year that the Japan Broadcasting Association (NHK) went to the American Radio Broadcasting Corporation to shoot the documentary "The Company of the World: Modern Alchemy", one of which showed the LCD screen. After the show was broadcast, this emerging technology attracted the attention of many people, including Tomio Wada, who is in charge of Sharp's computer display business.

He immediately suggested: Use LCD screens to make calculators.

Subsequently, Sharp's management, who had great ambitions to transform into a high-tech industry, went to the American Radio Broadcasting Corporation in person. At that time, the American Radio Broadcasting Corporation was not enthusiastic about this technology, so it sold the patent license to Sharp at a price of 3 million US dollars.

In 1973, Sharp announced that the world's first-generation commercial pocket calculators used LCD screens.

The United States originally had a second chance to overtake.
Sharp's LCD screen uses passive matrix technology. The image is composed of rows and columns of pixels. Complex images require many rows and columns, which results in slower data signals. In addition to the active matrix processing system developed by Westinghouse scientists in the United States, the use of transistors to turn on all pixels at once makes the screen faster, brighter, and clearer.

At that time, Westinghouse did not pay enough attention to this technology. The Brody team responsible for the development of the technology left Westinghouse’s independent portal in anger. In 1984, he began to sell experimental products and laboratory prototype screens. The industry has 80 customers.

If the first time Americans missed a good opportunity, it was because of the short-sightedness of ABC, then this time, American venture capitalists did not show enough courage. They believed that Japanese companies were already in a leading position. it is too late. Finally, Brody's company failed because it was unable to achieve scale.

We all know the following story. Japan has occupied and monopolized the world market. From the mid-1990s to 2010, the scale of the industry has increased tenfold. The current global sales are 114 billion U.S. dollars, but there is no American company. Profit from this industry, and no American workers are employed in this industry.

Ironically, the US state of Wisconsin took the initiative to introduce Foxconn’s LCD factory project several years ago.

3. In the new situation, how does the US government support scientific innovation?

Although the U.S. government's funding for scientific innovation has fallen sharply after the 1970s, there are not a few companies benefiting from the U.S. government's funding, and they have also achieved remarkable results. Genome sequencing is a typical case.

In 1988, the U.S. Congress agreed to fund the National Research Institute of the United States to conduct human genome research. In 1990, the Human Genome Project was launched, which is expected to last for 15 years, with a total budget of US$3 billion. In 1999, the funded Cereira Genomics Company carried out the human genome sequencing work, and its sequencing method was a great success.

There are many government-funded companies like Cereira Genomics, which directly stimulates the development of the entire industry and drives a considerable number of jobs——

In 2004, the total value of the stock market in the genomics category was 28 billion, and 75% were publicly listed companies. Among those private companies that are not listed, 62% are based in the United States;

From 1988 to 2012, direct and indirect economic activity expenditures related to this project amounted to US$965 billion, creating 280,000 jobs and US$19 billion in personal income;

In 2012 alone, the industrial sector supported by genomic research generated US$3.9 billion in federal taxes and US$2.1 billion in state and local taxes, far exceeding the US$3 billion investment in 13 years.

On the other hand, government-funded scientific innovations have higher social returns than private returns because of the spread of technological innovation to other fields. For example, scientific innovation has driven the development of some superstar cities in the United States-the center of biotechnology is located in Cambridge, and Microsoft moved its headquarters to Seattle in 1979. This has had a profound impact on the local area.

Having said so much about the benefits of government funding for innovation, the author also makes suggestions: It is proposed that the US federal government spends 100 billion US dollars to fund scientific innovation every year, which can create 4 million jobs and share the growth opportunities of the entire country.

Based on past innovation cases, the author suggests: First, focus on the integration of research and products. The public sector and private enterprises should establish partnerships to form a good complementarity, generate better returns to compensate for possible losses caused by risky investment, and attract more More investment; the second is to extend public research funds to various places to obtain intensive benefits; the third is to create new innovation centers through competition, and formulate local regulations that are conducive to economic growth, successful infrastructure plans and education base plans, etc.; The fourth is to use an independent committee to ensure that funds are used for the most valuable research projects; the fifth is to benefit more people by sharing innovation dividends.

"A Brief History of American Innovation" does not recapitulate the glory of the past in the field of scientific innovation, but under the new scientific competition landscape, it is vocal about the lack of funding for scientific innovation by the US government, and hopes to form realistic decisions to maintain the leading edge of the United States. . As professional scholars, Jonathan Gruber and Simon Johnson also explained the internal mechanism of scientific innovation to promote economic development, and analyzed the reasons why scientific innovation improves national competitiveness. This allows readers to deeply understand the importance of scientific innovation.

However, do the heads of government and politicians of the United States have such great determination? Can they give up political disputes for the benefit of the whole country? Do U.S. taxpayers agree to pay more taxes for this?

These are obviously more important and difficult issues.

Headquarters location decisions under conflicts at home: Evidence from a configurational analysis

Mariano Méndez-Suárez

Abstract

This study identifies the necessary and sufficient conditions to relocate firms’ headquarters (HQ) under circumstances of high political and economic risk (the illegal referendum of Catalonia in 2017). One of the most promising advances in the discussion of relocation decisions lies in combining non-economic conditions with traditional production factors. We use fsQCA methodology to test the model. QCA is a method based on set theory in which the outcome depends on combinations of elements, that have the nonlinear property and permits that certain conditions act in opposite ways under different circumstances. Using a database of 42 companies of different sectors, 28 of them that maintained HQ and 14 that relocated, the study provides evidence that family firms under similar circumstances may make decisions to stay or relocate as a function of the origin of the founders and the production factors of the relocation region. Second, we found that relocation decisions of subsidiaries under political and economic uncertainty are not affected by economic fac-tors and there is inertia in their behavior

Introduction

Except when the firm faces severe conflicts at home, the decision of relocating headquarters (HQ) is rare, and has substantial impact on both the old and new HQ sites as it would require replacing many individuals working in specialized roles who may not be willing to relocate (K. E. Meyer & Benito, 2016). But apart from the relocation of individual employees, HQ relocation affects the whole business operation (Gregory et al., 2005) and for the re-gions, losing HQ induces employment losses, decreases in the quality of labor markets (Strauss-Kahn & Vives, 2009) and worsens the image trademark of a city or place (Clouse et al., 2020). However, this complicated decision was taken by more than 3,000 companies (Garijo, 2017) that relocat-ed their HQ during 2017 to other Spanish regions due to the unprecedented rise in political uncertainty due to the Cat-alonian illegal secessionism referendum (Reid, 2017). The impact of uncertainty was especially severe on big banks, which suffered a huge increase in liquidity risk due to the mass withdrawal of bank deposits until they relocated.

Other well-known companies of different sectors, in-cluding auto, distribution, food, fashion, pharmaceuticals, and others, decided to maintain the sites of their HQ despite the high level of political uncertainty. Even though it was a risk, many companies decided to change the location of their HQ and a large number of other companies decided to stay. This provides a database of great value to be able to an-alyze the phenomenon of the location of the headquarters of companies in troubled times. Based on this data, the present research tries to answer the following research questions:

• Which reasons/conditions were necessary or sufficient for the firms to maintain HQ in Cata-lonia in a period of high economic and political uncertainty?

• Were the reasons the same for all the companies that maintained their HQ?

In line with other authors who study location prob-lems, instead of isolating regional factors, the present re-search addresses the problem in a holistic manner (Cui et al., 2020) using fuzzy-set qualitative comparative analysis (fsQCA) methodology (Ragin, 2008). The methodology permits to empirically identify and interpret the identity, socio-psychological, and economic configurations associat-ed with the outcome of the permanence of the firms HQ in Catalonia. The methodology infers causality from set-the-oretic relations rather than correlations (Fiss, 2011; Ragin, 2008). The fsQCA provides enhanced methodological rigor to multi-case analysis by allowing the researcher to system-atically analyze a far greater number of cases than can be subjectively assessed (Fainshmidt et al., 2017).The present research makes several important con-tributions in the design of the propositions, because it ac-knowledges the nonlinearity property of configurational approaches (Fiss, 2007; Meyer et al., 1993), so variables found to be causally related in one configuration may act in the opposite way in another configuration causing the oppo-site outcome. That is, under the same circumstances, similar environments, and political-economic situations. The same condition may cause firms to make opposite decisions, to either maintain or relocate HQ. Additionally, following the call from Jain et al. (2016), we include the impact of the governance structure, family firms and subsidiary, to deter-mine location choice. Additionally, this study contributes to extant literature by identifying the different sets of condi-tions that explains the different motives and typologies of firms that maintain HQ sites in periods of high political and economic turbulence.The article is organized into several sections. The next section provides the theoretical background to support the research propositions. The data and methods are presented in the third section, followed by a discussion of results in the fourth section. Finally, concluding remarks are presented.

Theoretical Background

To select the conditions that caused the outcome of staying or relocating HQ, this study acknowledges the lim-itations of considering only economic factors (Musteen, 2016) and integrates non-economic conditions such as those related to the origin and if the firm is a family busi-ness or not. Conditions related to the firm’s position towards separatism, including support for independence and the ref-erendum and purely economic conditions, as if the firm is a subsidiary of a multi-site firm and purely economic factors as those represented by the European Regional Competi-tiveness Index of the region in which the HQ are located after the outcome decision

In the design of the propositions, the present research acknowledges the nonlinearity property of configurational approaches (Fiss, 2007; Meyer et al., 1993), so variables found to be causally related in one configuration may be unrelated or even inversely related in another. That is, the same condition may cause firms in similar environments to respond differently to the situation created by the referen-dum and either to stay or relocate its HQ.

Origin and Family Business

Empirical evidence suggests that for the largest firms the corporate head office mostly remains located in the orig-inal home base irrespective of the firm’s subsequent growth in geographic footprint (Coeurderoy & Verbeke, 2016). Most founders are people embedded in their home environ-ments, with personal ties, close to family and friends (Mey-er & Benito, 2016) and preserving their corporate identity (Desai, 2009). In fact, firms are deeply rooted in their home countries, to their customers, employees, investors and sup-pliers (Ghemawat, 2011).

There is evidence that founders have a substantial im-pact in the inertia of companies to maintain their original HQ location (Lussier & Sonfield, 2009). Business people develop an emotional attachment to their place of origin and feel responsible toward the community that enabled them to grow (Meyer & Benito, 2016). Furthermore, family firms are usually part of the social network at the local level, sponsoring associations and activities related to the com-munity and pursuing the welfare of the locality (Berrone et al., 2010) and relating the firm’s success to the origin of the founders (Castillo & Wakefield, 2006)

Regarding risks, family firms are likely to place a high priority on maintaining family control even if this means accepting an increased risk of poor firm performance. They may also act more conservatively by avoiding business de-cisions that may increase variability even at the price of a business failure in the future (Gómez-Mejía et al., 2007). Research based on behavioral economics has empirically shown that family firms’ risk willingness or risk aversion depends on the scenario and the way in which each scenario might threaten these firms’ priorities (Llanos-Contreras et al., 2020; Stieg et al., 2018). These arguments lead to the following proposition:

Proposition 1. The origin of the founders is relevant and has a positive influence in the decision to maintain its HQ. Being a family business may influence the decision to stay when considering the roots of the family but also may influ-ence the decision to relocate considering the perceived risks for the business

Support for Independence and the Referendum

Catalonia is a territory where part of the population de-clares a Catalan national identity, defined as the attachment that subjectively links individuals to the nation (Rodon & Guinjoan, 2018). Although the support for independentism and the referendum was not majoritarian, the stronger asso-ciation with Catalan identity made some business associa-ions give explicit support to the referendum and indepen-dence (El Nacional, 2017). On the opposite side and because of the polarization of society regarding those issues, other associations or companies declared against the referendum and independentism

For some companies, the institutional support for the referendum may be considered a decrease in quality of the legal and regulatory regime and make them consider re-locating their HQ. However, other companies, which ex-plicitly support the referendum, may consider this fact as a positive change in the regulatory and legal regime. The configurational approach supports the apparently contradic-tory conditions that may lead to opposite outcomes, leading to the following proposition:

Proposition 2. Support for independence and the referen-dum may be relevant to the decision of maintaining their HQ, but for companies not supporting the referendum nor in favor of independence, it may be relevant to make the decision to relocate their HQ.

Subsidiary and Regional Competitiveness Index

There are important reasons to maintain the location of subsidiaries for multi-site firms, such as the relations with local suppliers and customers (McCann & Mudambi, 2005). Other key aspects in the location decisions are the closeness to the different sites, to minimize transport costs, or those related to management optimization around the world (De-sai, 2009)

For the owners of subsidiaries, the decrease in institu-tional quality in the host region increases the likelihood of relocation to another place, moving away from local gov-ernments with unfavorable policies that increase the institu-tional uncertainty (Valentino et al., 2019).

Regarding factors of production, previous research finds relevant to the location decision their abundance and quality including the physical, human and financial resourc-es available to firms in a given region. The quality of infra-structure provided by the economy’s transportation, com-munication, education and healthcare systems, as well as access to advanced factors of production, such as a scien-tific base and highly skilled labor (Cui et al., 2020). Addi-tionally, relevant factors include the quality of air services, proximity to large markets and specialized providers and the availability of skilled labor (Bel & Fageda, 2008). The Regional Competitiveness Index (RCI) in Europe analyzes the quality of those factors for regions across the European Union measuring, with more than 70 comparable indicators, the ability of a region to offer an attractive and sustainable environment for firms and residents to live and work (An-noni & Dijkstra, 2019). These arguments lead to the follow-ing proposition:

Proposition 3. Being a subsidiary of a multi-site company is relevant to maintain its HQ.Considering RCI is relevant to location decisions.

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Marketing strategies in family firms

Manuel Alonso Dos Santos, Orlando Llanos Contreras, Raj V. Mahto

ABSTRACT

Branding and reputation plays an important role in determining firm behaviour and outcomes. These well-known marketing concepts have attracted attention of family firm scholars as well. However, despite the significant growth in family firm literature over the last two decades, the application of marketing theories and concepts in family firm context is limited. Thus, there is an urgent need for a better understanding of reputation, branding, communication, and marketing perspectives in family firms. The goal of this special issue is to enhance our understanding of marketing strategies in family firms.

Introduction

Family-owned firms are the most dominant form of business entities in market economies around the world (Poza & Dauguerty, 2013). For example, these firms represent 70% to 90% of all firms in Europe, 70% of all firms in the USA and Australia, and up to 98% of all firms, ac-cording to some estimates, in Latin America. In African and Middle Eastern countries, family firms play an equally important role (Basly, 2017; Llanos-Contreras & Jabri, 2019; Zellweger, 2017). Family firms are central for many countries not only from an economic perspective, but also in terms of their social role in regional development (Bas-co, 2015; Llanos-Contreras & Alonso-Dos-Santos, 2018). Prevalent in family firm literature is the attribution of their uniqueness to family ownership and family influence. Family identity is a resource that influences con-sumer behavior and their response to communicational stimulus (Alonso Dos Santos et al., 2021; Sageder et al., 2015). Thus, the family identity of a firm is a source of differentiation that can be commercially exploited (Bote-ro et al., 2019). While research based on socioemotional wealth acknowledges that these organizations are especial-ly focused on protecting their reputation and family name (Alonso-Dos-Santos & Llanos-Contreras, 2019; Berrone et al., 2010), articles utilizing the resource-based view suggest these organizations retain valuable idiosyncratic resources that impact the lives of their customers and stakeholders (Craig et al., 2008; Gallucci et al., 2015; Zellweger et al., 2010). Furthermore, empirical findings confirm the positive benefits of communicating the family control of the firm to firm stakeholders, such customers, employees, and the local community (Deephouse & Jaskiewicz, 2013).The aforementioned economic and social impor-tance of family firms, when combined with the significant communication and marketing potential of a firm being acknowledged as family owned, creates a rich area for scholarly exploration. Some progress achieved in the area more recently includes: (1) understanding the strategies em-ployed by family firms to communicate their family compo-nent/identity through websites (Botero et al., 2013; Mice-lotta & Raynard, 2011), (2) identifying factors impacting firm image and types of strategic actions enhancing their family brand (Binz et al., 2013; Marques et al., 2014), and (3) assessing consumer response to firm communications emphasizing family nature, such as signals through a firm’s product packaging (Alonso-Dos-Santos et al., 2019; Beck & Prügl, 2018; Lude & Prügl, 2018).

Family firms’ branding and reputation has attracted family firm scholars’ attention in recent years. However, the application of marketing theories to family firms has witnessed a slow progress in academic journals. There is an acute scholarly need for understanding the reputation man-agement of family firms and how to make the most of it from a branding, communication, and marketing perspec-tive. Accordingly, articles in this special issue have been selected because of their contribution in making progress on this theme. This special issue is publishing five articles, which present the work from twelve scholars from five different countries and nine different universities. The articles address issues related to customer-family business relationships, perceptions of family businesses and customer behavior (purchase intention), risk aversion and marketing collab-oration with other businesses, digital marketing strategies for family businesses and reputation and family identity. In terms of methods, most of them are based on quantitative data analysis with one using regression analysis and two others utilizing structural equation analysis. One article is based on a mixed research design and one is a systematic literature review.

Discussion and Contributions

The article by Cuevas-Lizama, Llanos-Contreras and Alonso-Dos Santos entitled, “Reputation and identity in family firms: Current state and gaps for future research” ex-plores the strategic value of reputation and the transmission of a family firm’s family identity. This research uses a sys-tematic literature review approach, studying 56 articles in-dexed in the Web of Science database, to analyze the current state and evolution of the topic, the impact it has had in re-cent years, and to identify relevant research areas with their respective contributions and research gaps to guide future work. The analysis of this work reflected seven research topics related to reputation and family image, finding great-er relevance in works that analyze the sources of advantages of the reputation of family businesses and how the priority to preserve it influences their strategic behaviors such as investments in R&D and their socially responsible activi-ties. Other papers found in this article advance study themes that the transfer of family identity effects both in financial markets, where family firms seek to be transparent in order to take care of their image, and in the consumer market, where they have a better response compared to non-family firms. Finally, this work highlights opportunities for future research by considering other less studied areas that detail how family firms transmit family identity to internal groups, the diffusion strategies they have with external groups, and the effects of reputation on performance.

Botero and Litchfield-Moore make contributions by as-sessing the perception about family firms. Based on signal-ling theory and the theory of reasoned action, the authors predicted that the family identity would be a signal which determines consumers’ perceptions, attitude, and intention to buy in relation to family firms. This research included four studies to respond to the question “What are the as-sociations that customers have with products and services from “family-owned businesses”? Study 1 was based on the analysis of qualitative data from a four-question survey to 87 students from introductory courses. Study 2 considers data collected from a 73 item survey which was responded to by 145 college students. Items in this survey allow the quantitative assessment of perceptions about family firms, attitude toward these organizations and intention to buy and work for these firms. Study 3 included additional respons-es from another 90 college students. Unlike Study 2, here questions on intention to buy and intention to work were asked to different groups to make the survey shorter and easier to answer. Finally, Study 4 was focussed on exploring the generalizability of their previous results and included 65 working professionals (in addition to 54 new students) in the sample. Results are in line with research suggesting that communicating the family identity of a firm would re-sult in a positive response from consumers (Alonso Dos Santos et al., 2021). Botero and Litchfield-Moore confirm that “family-owned businesses” would have an advantage in using their identity as part of their communication and marketing strategies. Results suggest that consumers would have positive perceptions about organizational values and neutral perceptions about products and services offered by family firms. The authors concluded that “As suggested by the Theory of Reasoned Action, these perceptions affected attitudes and intentions towards Family Owned Business.”The work from Gonzalez-Lopez, Buenadicha-Mateos, Barroso and Sanguino deals with the theme of digital mar-keting strategies in family firms. More specifically, the au-thors analyse the online presence and differences between Ibero-American and American family firms in the world. Based on information provided by the Family Business Global Index (FBGI), this article aimed to respond to the following two research questions: (1) Does the quality of a corporate website and the presence in social networks in-fluence the family firm’s turnover? and (2) Are there sig-nificant differences between Ibero-American and American family firms regarding online presence, in terms of quality of corporate websites and presence in social networks? The article analyses content, form, function and presence in so-cial networks. This work is important because the profound influences of social networks and internet in communica-tion and marketing strategies in all the different econom-ic sectors around the world (Alonso Dos Santos, Calabuig Moreno, Crespo et al., 2016; Alonso Dos Santos, Calabuig Moreno, Rejón Guardia, et al., 2016). Internet is not only the one of main and more accessible communication chan-nels for large and small businesses, but also it offers a wide range of options to develop flexible and focused marketing strategies. Among other findings, this article results show that there is a negative relationship between website quality and company turnover and a positive relationship between social networks and company turnover. This is important for family firms because it provides insight into the effec-tiveness of different communication channels and strategies they have access to. Also, the study did not find significant differences among the family firms of the two regions with respect to online presence, which suggests similar availabil-ity of this resource in both regions. Thus, this work con-tributes to the specific topic of our special issue by mak-ing progress in the understanding of marketing strategies in family firms. The article also makes progress in family firm literature, by integrating concept and construct from the marketing research. From a managerial view point their findings are important as they shed light on the importance of enhancing family firms’ online presence, and the power of building strong family firm brands based on this online presence.

The article entitled, “Personalized Service and Brand Equity in Family Business: A Dyadic Investigation of How Family Business Owners’ Time Servicing Customers Im-pacts Work Overload: Spillover Effects in Delivering a Per-sonalized Service and in Building Brand Equity” by Velas-co, Lanchimba, Llanos-Contreras and Alonso-Dos Santos focused on the understanding of demand and resources on the firms’ brand equity. More specifically, this research fo-cused on answering the question of (1) how family busi-ness owners’ time in serving customers, work overload, and Collaborative Organizational Citizenship Behaviours inter-act and influence the delivery of personalized services in Small and Medium size Family Enterprises, and, (2) how these relationships ultimately influence these firms’ brand equity. In this way, the article made progress on the under-standing of how family business owners’ time in servicing customers triggered a chain of effects (positive and nega-tive) which finally impacted on small and medium family enterprises’ brand equity. The authors’ study is highly im-portant and relevant because brand equity is closely related to corporate reputation and accordingly, it would not only be a good way to assess reputation in family firms, but also to understand factors that enhance or harm it. This is par-ticularly important in family firms as the firm reputation is closely tied to the family reputation and it is one of the most salient socioemotional wealth priorities (Deephouse & Jaskiewicz, 2013; Llanos-Contreras & Alonso-Dos-Santos, 2018). The findings in this article are relevant and make an important contribution to theory and practice. From a theo-retical viewpoint, the study sheds a light on the connection between brand equity and firm reputation. It is important as it suggested that brand equity would be a good proxy to assess reputation in family firms. Theoretical contributions are made also to marketing and reputation theory in family firms by integrating the analysis of resources and process to reputation theory. In this way this article goes beyond the analysis of the sole effect of communicating the fam-ily identity and integrates the study of the process which is central in the marketing strategy. From a practical view-point, family-business managers can learn by identifying strategic resources and processes that influence their firms’ brand equity and ultimately the family and firm reputations. Controlling these resources and process would be central for managers in order to preserve their firm and family rep-utation.

Ibáñez’s paper, “Inter-firm marketing collaboration in family businesses: The role of risk aversion”, explores how risk aversion in family firms influences their non-fi-nancial strategic decisions to collaborate in marketing. This research addresses two issues barely explored in the fami-ly firm literature: (1) the influence of risk aversion on the decision to collaborate to develop marketing capabilities and (2) the choice of a partner known or unrelated to the family firm for this cooperation. The author proposes that both decisions are made simultaneously. She uses a bivar-iate probit method to evaluate the decision to enter into a collaborative relationship and the choice of a partner in a single econometric model. Results suggest that family firms that are more conservative in terms of risk-taking are less willing to engage in collaborative relationships for market-ing activities. However, these firms are willing to take a risk by collaborating with a partner they do not know (rather than a known partner). This apparent dichotomy is consis-tent with previous research showing that family firms are both risk-taking and risk-averse in order to preserve socio-emotional wealth (Gómez-Mejía et al., 2007). In this case, socioemotional preservation would not only be related to risk-taking decisions, but also to their priority of preserv-ing good standing with people they have close relationships with by avoiding engaging in partnership with them. This article contributes to family business research by extending the study of risk aversion beyond the financial and econom-ic decisions of family firms. Concluding ThoughtsIn summary, this issue of Journal of Small Business Strategy is a special issue on “Marketing strategies in fam-ily firms”. The five works in this special issue significantly enhance our understanding of family firm reputation from a strategic marketing viewpoint. The studies in the special issue contribute to reputation theory in family firms, as well as to knowledge in marketing and communicational strate-gies for these specific types of organizations. The articles in this issue allow the readers to know the state of the art from a theoretical viewpoint, but also to analyse empirical find-ings in relation to the effect of communicating the family firm identity, the influence of family identity in the world wide web, the importance of small and medium family firms’ resources and demand in building brand equity, and the importance of risk-taking aversion toward collaboration on developing marketing capabilities. From a managerial perspective, this special issue provides important insight for family firm owners and managers in relation to the im-pact of leveraging their family identity in their marketing strategies. Also, practitioners can learn about mechanisms, processes and resources which would drive the successful implementation of such strategies in these firms.