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In spite of rows of executives and advisers with millionaire salaries, the big companies can make decisions that, in the best of cases, are disconcerting and, at worst, suicidal.
How can such organizations, headed by well paid CEOs with enough money to hire the best employees and consultants, find themselves in this situation?
Carillion, a British multinational building company, is one example. The collapse of this year has left thousands of people out of work.
This large company has signed contracts with profit margins so narrow, that the delays it caused immense losses .
If we go back a little bit, we have Nokia, which in a he dominated the mobile phone market, until he does not recognize the competition that would come from it. ; iPhone.
There are a series of clbadic traps in which large corporations cen. Call them the "deadly sins" of the business world.
1. Pride
In August 2008, Gary Hoffman entered the offices of Northern Rock, a credit bank based in Newcastle, in the north of England.
He had been appointed executive director of the mortgage institution, which had just been rescued by the government that year after being on the verge of collapse.
One of his first impressions was the "palatial" offices of the place and the even more luxurious headquarters that was under construction.
"The leaders had lost" They occupied large offices, separated from their colleagues, it was physically difficult for their colleagues to talk to them. "
Northern Rock had experienced a rapid expansion offering attractive mortgage contracts. financing these contracts with short-term loans.
"They were driven by their own personal and corporate ambitions," he says.
According to Hoffman's opinion: "The more you increase in your organization, the more it is more important that you have your feet on the ground. "
" And, if you're not careful, people will not tell you when things start to go wrong. "
Hoffman is now with insurer Hastings, where he says management spends a lot of time talking with staff and trying to solve problems for them
"It may be food in the cafeteria," he says.
2. Fear
Bill Grimsey is a veteran of the retail sales who has witnessed the time when a big company got in trouble.
In 1996, he was appointed executive director from the UK chain of DIY warehousing Wickes, which was in danger of crashing due to an accounting fraud .
He was able to secure new financing for the company and changed his business culture.
One of the techniques that he found positive was to spend a week each year working in a different branch and d & # 39; Learn about the problems that the staff had.
"You should not underestimate the influence of the leader in the business," he says.
He came across the executive directors who govern instilling fear letting their directors fear losing their jobs and "doing what they were told to do".
Grimsey catalogs the "dictatorship" as an executive director ran his business, where the client "was barely mentioned".
In these circumstances, Grimsey indicates that the staff may take desperate measures, as report false figures to keep the boss happy .
Gary Hoffman has a similar argument. Managers must be very careful when interacting with their staff, especially when they approach them with problems.
"When you hold the power of executive director and close them aggressively, they often do not come back."
3. Self-Sufficiency
"Anyone can grow up quickly," says Hoffman.
"You have to make sure that when you grow up too fast, you do not take a lot of risks," he recommends.
For example, low-cost airlines, where customers are satisfied with low prices, but such times when some airlines do not pay enough to survive.
Last year, Monarch Airlines and Air Berlin both went bankrupt after posting heavy losses.
Executive Directors must make sure that everything they do is "anchored in the principles of profitability", which seems obvious.
Even worse, Hoffman explains that there are bosses who can be blinded by obsession only to grow grow.
In the sales sector, it is more common that it seems that retailers forget something else obvious: the customer.
Grimsey says, "When they become carefree and self-reliant, they begin to offer the same things day and night, without realizing that consumers are changing in terms of style, interests and behaviors.
4. Greed
According to Grimsey, boards of directors spend too much time waiting for the salaries and bonuses of their senior executives .
"If you look at the history of the last 15 years of the business world in the UK, especially in retail sales, especially in public companies, these people have become greedy. "
"You must give up greed in the high place and start sharing, you must spread the profits throughout the organization."
Highlights the John Lewis chain of stores as a better model for paying employees.
Each year, factory workers receive their share of profits (although, in March of this year, the John Lewis Society announced that they would not be there would have obligations for the fifth consecutive year).
André Spicer, professor of organizational behavior at the Cbad School of Business Administration, says that the way senior executives are paid can be part of the problem.
The "significant" parts of the payroll are made up of stocks, which can be billed too quickly, he says.
"Short-term results are often imposed on long-term survival," he says. 5. Superficiality
In some companies "they focus a lot on creating a facade to make things look beautiful," says Professor Spicer
This may include excessive spending for initiatives. Introduction to Fashion or Fantasy
All of these things may involve spending too much money on consultants who, in some cases, "outsource responsibility," he says.
Enron, the company Giant energy from the United States, is a good example of a company that brought together an impressive facade that hid their problems explains Professor Spicer.
The company had been praised in the press for revolutionizing the energy industry, but it had hidden billions of dollars in debt and had collapsed in 2001, at the end of the year. time, the most resounding fall in the history of US companies. UU
Professor Spicer warns that it is "much easier" to change the image of a company than to make real changes.
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