Conflict management

Who did not find, was in the middle of a conflict or had to resolve one in your professional career?  You will not escape conflict in your organization or work environment. In my view it is inevitable. Mainly because the objective, values and needs of groups and individuals in any organization do not always coincide.

In my view, sometimes, conflict may be a sign of a healthy company. Boring agreement on everything is unnatural and debilitating. There should be fight of ideas about tasks and projects and disagreements should not be suppressed. They should come out into open, because is the only way in which you can ensure that the issues are explored and conflicts are resolved.  This post is about managing the conflicts or better to say trying to manage the conflicts.

Every reader could have his/her own experience and way of resolving the conflicts he/she was involved or he/she saw in his working environment.

You can use, let´s say, a peaceful co-existence where you aim to smooth our differences and emphasize the common ground. It is well known we are encouraged to learn to live together. There is a good deal of information, contact and exchange of views and individuals move freely between the different teams, for example, between your headquarter and the affiliate or between sales and marketing departments. This is a pleasant ideal but it may not be practicable in many situations.

It is also known that conflict is not necessarily resolved by grouping people together. Improved communications and briefing groups could be a good idea but are useless, in my opinion, if management has nothing to say that people want to hear. And there is also the danger that the real issues, submerged for the moment will surface again in the future.

Other possibility is to get compromise. In this case the issue could be resolved by negotiating or bargaining and neither party wins or loses.  In this situation there is no right or best answer. Agreement only accommodates differences. As you can imagine real issues are not likely to be solved.

Based on the above the best approach would be to find a genuine solution to the problem rather than just accommodating different points of view. And as I said before sometimes conflict situations can be used to advantage to create better solutions. This situation has to be generated by those who share the responsibility for seeing that the solutions work. So what would be the sequence of actions in this case? First, those concerned work to define the problem and agree on the objectives to be attained in reaching a solution. Second, the group develops alternative solutions and debates their merits. Third, agreement is reached on the preferred course of action and how it should be implemented.

The conclusion could be that conflict is in itself not to be deplored. It is an inevitable concomitant of progress and change. What is to be disapproved is the failure to use conflict constructively. Effective problem solving both resolves conflicts and opens up channels of discussion and cooperative action. Take this into account in your next situation!!!!

Team building

In this post I would like to share my experience in one of the most difficult tasks you face as a manager, executive or when you have responsibilities for the results of teams whatever is the level or the environment:  team building.

We spend a lot of time leading teams and leading with people in groups. Getting people to work well together is as important as motivating individuals, in my opinion.

Team building is a matter of establishing mutual confidence and trust among all the people working in your team. You should aim to create a feeling, let´s say, of interdependence. In my experience a good team feels shared responsibility for getting results.

A lot of readers, in managerial roles, know very well that people do not necessarily work well together. Personal and interdepartmental rivalries exist in the vast majority of companies. It is likely you agree with me with this. But you need to look for them or they can ruin the most brilliant groups.

So what´s is the point? Good teamwork is essential. To become an effective team builder it is useful to know and understand the behavior of the members of your team.

Normally you can find what I could call formal and informal groups. The first one are groups that are created by the company to achieve a defined purpose and normally are aligned with the organization needs. The second are set up because they have some affinity for one another. In this case the group exists to satisfy the needs of its members.

For me, the ideal situation, would be for both groups to coincide so they will satisfy the needs of both the organization and the individuals in it.

One of the most important things to look for in groups is the status system that may exist within them. If you understand the informal as well as the formal hierarchical order you will be better equipped to deal with problems within the team.

Your aim, and this is really difficult and a stressing task, is to create an effective team. You need to create a vision, engage the members to become cohesive, self-supportive and finally show them where it is going.

But the question is how can we know we have or we are creating a real effective team?

My thought is you should look for some features as follows:

·         The atmosphere tends to be informal, comfortable and relaxed.

·         The task of the team is well understood and accepted by the members.

·         The members listen to each other. Very important, indeed.

·         There is disagreement and the reasons are carefully examined. This is essential in my view.

·         Most decisions are reached by a kind of consensus.

·        Criticism is frequent, frank and relatively comfortable. In other words, there is little evidence of personal attack either openly or in a hidden way.

·         When action is taken clear assignments are made and accepted.

·         The leader does not, normally, dominate it.

The readers can think other features based on their experience. The above are just mine.

The final ingredient is your capability to lead, in other words, your leadership.  The role of the leader is critical, especially nowadays, when we are in times of crisis so it is when the group must get into action fast.

Within this role of leadership you must look for getting cooperation. The members of an effective team cooperate equally will with one another and of course, with the team leader.

But are there methods for team building? This is not an exact science. You should develop your skills based on your experience and by observing other managers or executives, within or outside your organization and learn from them. This will allow you to create your own management and leadership style.

So, in my experience, you need to demonstrate to your team:

·         You know where you want them to go

·         You know how they are going to get there

·         You know what you expect each member of the team to achieve

·         And you know what you are doing.

When you have done the above you are ready to:

·         Encourage participation in agreeing objectives and targets

·         Rotate jobs within your team so that the team members identify with the reams as a whole rather than with their own jobs.

·         Ensure that communication flow freely within and between groups

·         Encourage informal meetings between your team to resolve problems.

And finally, if you are a member of a team and you want to work effectively within your group you would need as follows:

·         Understand the purpose of the team

·         Find out what you are expected to contribute

·         Analyze your own skills and competences to establish how you might best contribute

·         Prepare yourself well before meetings. For example, get your facts and arguments at your fingertips

·         Don’t talk too much. Think about this, the art of being a good team member is to know when and how to intervene.

·         Assess your own performance as a team member. Ask yourself what you are good and not so good at doing by reference to your successes and failures, and  take appropriate action.

And remember,  the team makes you and not the opposite ¡¡¡

How things go wrong and how to put them right

It is likely that a lot of professionals in the different areas of the finance function have experienced the stress when things go wrong. Things go wrong because people do less than they are capable of, misuse their resources or choose an inappropriate time or place in which to do it and normally the situation is misjudged and the wrong action taken.

In this post I would like, again, to share some experiences and suggestions to cope with the situations some people might face in their daily professional activities and even in their personal lives.

First of all, let me remember the well-known and so called Peter´s principle. Dr. Peter suggested that in a hierarchy, individuals tend to rise to the level of their own incompetence. In his experience system encourages this to happen because people are told that if they are doing their current job efficiently and with ease, the job has no challenge and therefore they should be promoted. It is also true, in my view, that this principle has only been accepted as common manner of speaking as it reflects a fundamental problem when assessing potential. We know or we think we know that someone is good at his present job. But does this predicate success in the next move up? Perhaps yes, perhaps no. However we cannot be sure because the skills needed by, for example, a scientist are quite different from those required by a leader of the research team. In other words, technical competence does not necessarily indicate managerial competence.

First thought, can we beat the Peter´s principle for us? The answer, in my opinion, is yes. But with difficulty, of course. Why? Because people don’t usually refuse promotion!! If they do, they become suspect. When you read this post probably you will remember your own experience, your friend or your colleagues, being in the same situation. Am I right? However it is perfectly reasonable to check on what is involved if you are promoted. You should get precise answers to questions on what you will be expected to achieve and more importantly the resources you will be given to achieve it and the problem you will face. If you think these demands are unreasonable discuss the job to see if they can be modified.

In my view, don’t take a job unless you are satisfied that you can do it or at least that you can learn how to do it within an acceptable period of time. And don’t forget to find out if your predecessor failed and if so, you can ask what went wrong so that you can avoid making the same mistakes.

Second thought, can we beat the Peter´s principle for others?  Well, if you are in a position of offering a promotion or a new job, you have to take into account the Peter´s principle and how to avoid it.  You need to match the capacities of the candidate to the demands of the job. So you need to analysis the skills required. For example, managerial, analytical, technical, communications etc. And then, measure the candidate against each of these criteria. This matching process should identify any potential weaknesses.

A lot of readers will know very well the typical sources of incompetence and it is likely they have seen some typical situations as follows:

·         Conservatism, for example, the typical “that’s the way it always worked. We have been market leaders for the last 10 years, why change? Familiar with this?

·         Rejecting information, what did you say about our losing market share? I don´t believe. The market research surveys are always inaccurate.

·         Indecisiveness, we need to think a bit more about this. We need more information. Let´s call a meeting next week to look at the pros and cons. Familiar right?

·         Obstinate persistence, don’t confuse me with the facts. That’s the way is going to be.

·         Scapegoating, it´s not us, it´s the rate of exchange. The government policies are killing us.

·         Suppression of news, don’t tell them about how well we are doing. They only ask for more money.

·         A belief in “mystical” forces, I just feel in my bones we must do this thing. From a CEO I worked with many years ago.

Hence see below my summary about why things go wrong (normally):

·         Inability to learn from mistakes

·         Pure incompetence through over promotion

·         Poor selection, inadequate training

·         Over confidence

·         Under confidence

·         Laziness

·         Lack of foresight

Every reader will have their own experiences, anecdotes and clear view about why things go wrong for them or for the companies they work but I am almost sure that some will coincide with the above mentioned. If not, let me know.

 

Achieving results

All of us are facing the pressure to achieve results in our professional activities. Achieving results, getting things done, making things happen. That is what management is all about in my opinion.

In this post I would like to take the manager´s view to share some thoughts based on my experience and the learnings I took from this experience.

You can find different kind of managers. For example, those who make things happen, those who watch things happening and, let´s say, those who don’t know what is happening. Ideally the focus should be in making things happen as the best way to succeed.

But let´s consider some questions to be answered:

·         Is getting things done simply a matter of personality which some people have and others haven´t? For example, drive, leadership, ambition…

·         And if you don’t have the drive, leadership and so forth which it takes, is there anything you can do about it?

·         Finally, to what extent is the ability to make things happen a matter of using techniques which can be learnt and develop during your career?

In my view, personality is important. Unless you have determination and drive nothing will get done. But we need to remember that your personality is a function of both nature and nurture. Your experience is the critical element together with education and training.

We cannot change our personality easily but we can develop and adapt it by learning from our own experience and by observing and analyzing other people´s behavior. That’s why is so important to absorb all the best from your superiors and colleagues to create your own management style and become a real achiever.

In terms of the techniques for achieving results, I would mention planning, organizing, delegating, communicating, motivation and controlling. For sure, you can learn all of them. But in my view these techniques are only as effective as the person who uses them. They should be applied in the right way and in the right circumstances. And don’t forget you still have to use your experience to select the right technique and your personality to make it work.

To become a person who makes things happen you have to develop skills and capacities by understanding, analyzing and learning so my recommendation would be as follows:

·         Understand what motivates and inspires achievers.  For example, the personality they display in getting things done.

·         Observe what achievers do. For example, how they operate, what techniques they use

·         Analyze your own behavior, just to stress behavior, not personality. Compare it with that of high achievers and think how to improve your effectiveness.

·         And very important, learn as much as you can about the management techniques available in every moment. In other words, be updated in all of them.

Probably one of the most difficult things is how to analyze your own behavior. I faced this problem in a lot of occasions. It is no good to analyze your own behavior unless you have criteria against which you can measure your performance. So you have to set standards for yourself and if you don’t meet them, ask yourself why. I have also used this approach many times. The answer should tell you what to do next time. As an example, the basic questions you could ask yourself could be as follows:

·         What did I set out to do?

·         Did I get it done?

·         If I did, why and how did I succeed?

·         If not, why not?

 The aim is to make effective use of your experience.

Based on all the above the question is what do achievers do? What I have seen in a lot of high achievers and I have tried to replicate in my personal career, are things like these:

·         They define to themselves precisely what they want to do

·         They are prepared to discuss how things should be done and will listen and take advice. But once the course of action has been agreed they stick to it unless events dictate a change of direction.

·         They work hard and work well under pressure.

·         They are never completely satisfied with their own performance.

·         They normally take calculated risks.

·         They are enthusiastic about the task and transmit their enthusiasm to others.

·         They are able quickly to sum up situations, define alternative course of actions, and suggest to their collaborators/colleagues what needs to be done.

·         And finally, they continually monitor their own and their collaborators performance so that any deviation can be corrected in good time.

As a conclusion, I would say, the process of observation, analysis, and learning will help you to become an achiever. But remember, achieving results is ultimately about making promises, indeed, to others and to yourself, and above all keeping them.

 

 

Budgeting

In this post I would like to share, in all modesty, my experience in one of the critical activities the finance department is in charge: budgeting/forecasting.

Although the vast majority of the finance community is aware or has experienced similar situations or methodology I think it is worth to give some personal insight.

Let´s start from the typical question: Do we need budgets? The normal reply is we do, of course.

Budgets don´t win friends but they influence people. They can be painful to create and agonizing to manage. But they translate policy into financial terms and whether like it or not that is the way in which plans should be expressed and ultimately, performance controlled.

So in my view I can indicate three reasons for the need of budgets:

·         To show the financial implications of the plans

·         To define the resources required to achieve the plans

·         To provide a means of measuring, monitoring and controlling the results against the plans.

However there are also problems. The typical problems you face could be as follows:

·         An inadequate basic budgeting procedure. For example, imprecise guidelines, unsatisfactory background data, cumbersome systems, lack of technical advice and assistance to managers and of course, the typical arbitrary cuts by top management. Does this sound familiar to you?

·         Lack of accurate forecasts of future activity levels. Very critical in my experience.

·         Difficulty in amending the budget in response to changing circumstances.

·         The fundamental weakness of basing budgets on past levels of expenditure which are simply added up rather than subjecting the whole of the budget to a critical examination.

·         Weakness in reporting or controlling procedures which prevent the budget being used to monitor performance.

You could reduce the above mentioned problems when preparing the budget by using some methodology and discipline in the process, for example:

·         Prepare budget guidelines which set out policies on where you want to go and how you want to get there. For example, this could be expressed in targets, for sales production or activity levels, and as an outline of the major marketing and production plans. In addition, the assumptions to be used in budgeting should be given. This could include rates of inflation or increases in the costs and prices.

·         Ensure that those responsible for preparing the budgets are given advice and encouragement by the correspondent managers. These “experts” should be there to help, not to blame or threaten!!

·         Get people to think hard about their budgets. For example, they should not be allowed just to update the last year´s result actuals. Very typical right?? Wherever there is any choice on how much is spent they should be asked to go back to first principles and justify what they are doing. This is a base for the so called zero base budgeting that I will comment briefly at the end.

·         Do not accept any significant increase or even decrease from last year´s budget without an explanation.

·         Probe to ensure that budgets submitted are realistic and do not include the typical “cushions”. If you need this, discuss it in advance to get agreement.

·         If you are in charge to approve or review the budget do not cut arbitrarily. Give reasons. If you don´t you will foster, the “cushion factor” or the typical “could not care less attitude.

·         Finally, update or “flex” budgets regularly especially when activity levels and costs are subject to large variations.

Flexible budgets are a good tool. If it is possible, with a reasonable degree of accuracy, to relate the changes in the revenues and costs to levels of activity, the use of flexible budgets is worthwhile. Budgets are, let´s say, “flexed” by recalculating revenues and costs which vary with activity levels by reference to actual levels so giving an expected level of revenues and costs. The difference between the original and expected levels is normally referred as the activity variance and the difference between expected levels and actual levels is normally referred as the controllable variance. It is on the latter figure where we should concentrate if you want a realistic picture of how costs are performing. There is also the possibility to review the budget periodically during the year to meet changing conditions. Here you will use the well-known rolling budget/forecast and although, in my opinion, it is not as effective as the fully flexible system, it is easier to operate.

The final piece is the budgetary control. A budgetary control procedure is not easy to achieve. You have to work at it and create it based on your needs and goals. There is no problem in designing a system with “elegant” forms and lots of information. The difficulty is in maintaining the scheme as a useful instrument once it has been set up. The encouragement can only come from the top. The CEO/CFO should insist on a rigorous approach to building budgets and a reporting procedure which is used to make things happen the way they want them to happen. And they have to ensure that everyone concerned knows what is expected and is accountable for any failure to perform.

To conclude, some comments on zero-base budgeting. The traditional approach to budgeting tends to perpetuate the commitments of previous years. For example, past levels of expenditure are used as a base from which to project increases or decreases. Only part of the budget is analyzed and normally, the managers concentrate on justifying increases rather than challenging the need for any function or activity in its present form. The priority based budgeting (zero base) requires managers involved in budgeting to re-evaluate all their activities in order to establish their relative priority and decide whether they should be eliminated or funded at a reduced, similar or increased level.

Zero base budgeting is not the panacea and it has often failed because companies have introduced overelaborate procedures which have sunk almost without trace in a sea of paperwork. So here the emphasis, in my experience, should be on the value in getting priorities right and ensuring that costs and benefits are thoroughly reviewed to the advantage of all concerned.

It is likely some of the readers are currently in their annual budget exercise so Happy budgeting!!!

 

 

 

Troubleshooting

No matter what you do, things will sometimes go wrong. For those working in multinational organizations and even in small/medium companies and depending on your position, manager, senior manager, etc you will often be called upon to put them right or to employ other people to do it for you.

In this post I would like to comment on the methodology I have applied in different situations where things were really wrong. Obviously the person facing the problem will know better the company, the environment and the circumstances but I think you will recognize some pattern to be used.

Troubleshooting requires some kind of diagnosis ability, to size up the difficulties. Let´s say, know-how, to select the required solution and decide how to implement it and finally a reasonable level of managerial skill to put the solution into effect.

So first, you need to divide the process in parts as follows:

·         Planning

·         Diagnosis

·         Solution

You could use, depending on the level of the problem or your company policy, management consultants. Although I am not against this I think it is worth to try to do it on your own in the first instance. At the end of the day, if you are working on the multinational environment you should be familiar, to some extent, with the methodology they use and on top of that your knowledge of your company is deeper.

The typical approach to be followed would be as follows:

·         Analysis of the present situation. What happened and why

·         Development of alternative solutions to the problem

·         Decision as to the preferred solution, stating the costs and benefits of implementing it

·         Defining the method of proceeding. How and over what time scale should the solution be implemented, who does it and with what resources. For example, if a staged implementation is preferred, the stages will be defined and a plan worked out.

In my view, the most important thing to do at the planning stage is to define the problem, clarify the objectives and terms of reference. A problem defined is a problem half solved. And it is the difficult half. The rest should follow quite naturally if an analytical approach is adopted.

Once you know the problem you can define what you want done and prepare terms of reference for those who are conducting the investigation.

Diagnosis means finding out what is happening, the symptom, and then digging to establish why it is happening, therefore the cause. Your skills will allow you to dissect the facts, sort out what is relevant to the problem and refine it all down until it reveals the crucial pieces of information which show the cause of the problem and point its solution. During the process of diagnosis it is needed you remain open-minded. Listen and observe, but suspend judgement until you can arrange all the facts against all the opinions.

Base your diagnosis on analysis of the factors likely to have contributed to the problem, for example, people, systems, structure and circumstances. And finally develop your checklist.

My standard checklist is as follows:

People

1.       Have mistakes being made? If so, why? For example, is it because the team is badly managed or trained in the topic causing the problem?

2.       If management is at fault, was the problem one of system, structure or even the managers themselves?

3.       If the people doing the job are inadequate why were they selected in the first place?

Systems

1.       To what extent are poor systems or procedures to blame for the problem?

2.       Is the fault in the system themselves? For example, are they badly designed or inappropriate?

3.       Or is it the fault of the people who operate and manage the systems? In this case we need to find out the circumstances leading to the situation.

Structure

1.       How far has the company or management structure contributed to the problem?

2.       Do people know what is expected of them? Very typical question, indeed.

3.       Are activities grouped together logically so that adequate control can be exercised over them?

4.       Are managers and senior managers clear about their responsibilities for maintaining control and do they exercise these responsibilities effectively? It is likely this is familiar to many readers!!!

Circumstances

1.       To what extent, if any, is the problem a result of circumstances beyond the control of those concerned? For example, have external economic pressures or changing policies had a detrimental effect? Sometimes this is the issue.

2.       If there have been external pressures, has there been a failure to anticipate or to react quickly enough to them. Very typical situation as well.

3.       Have adequate resources, for example, people, funding and materials, been made available and if not, why not?

You can create your own checklist, of course, as it will help you to face successfully the final part, the solution.

The diagnosis should point the way to the solution. But this may still mean that you have to evaluate different ways of dealing with the problem. There is no one best way only a choice of different alternatives. You need to narrow them until you reach the one which, let´s say, on balance, is better than the others.

Avoid being too theoretical. Take into account the circumstances, including the ability of people available to deal with the problem. Your recommendation should be practical in the sense that it can be made to work with resources which are readily available and within acceptable timings. You should make clear not only what needs to be done but how it is to be done. Assess costs and benefits and demonstrate that the benefits outweigh the costs.

And finally take care when you apportion blame to individuals. They could be victims of poor management, poor training or circumstances beyond their control. Their help may be essential in overcoming the trouble. It is unwise to destroy their confidence or their willingness to help.

To summarize, your recommendation have to be realistic, phased in without undue disruption and without spending more time and money that is justified by the results.