The Case of the Missing Work Ethic Part I

I was sitting with the CEO of a mid size organisation a couple of weeks ago. We were discussing the big challenge facing all CEOs today, irrespective of which country they operate in: execution of strategy to achieve business results. I’ve spoken to many CEOs about this challenge while working with their leadership teams to facilitate their execution and achieving business results. They all agree that accountability is a huge barrier to successful execution. And this is true not just in India, but all over the world. This CEO expressed the same thoughts about accountability.

Since we have a proprietary method that builds accountability cultures in organizations, the conversation revolved around how accountability can enhance execution. Then, the CEO made an interesting statement. He said, ‘the big problem I find is that people are not serious about work today. They are not loyal to the organization and there is a lack of commitment. Their work ethic is missing.’

I found this statement very interesting. And true. The rapid growth in the Indian business environment in the last few years has resulted in two trends that are common to different industries and organizations. Both these trends have arisen as a direct result of the talent crunch: a shortage of talented leaders who can hit the ground running; an issue that I have written about in an earlier article.

Two trends in talent availability and career growth
The first trend is that people have been promoted rapidly to fill in vacancies that appeared as a result of rapid growth. With organizations desperate to fill these vacant leadership positions, people have been promoted on the basis of perceived future potential; sometimes even when they have not had sufficient time in their previous or current assignments to prove themselves and deliver results.

The second trend is that the boom in business led to a proliferation of opportunities for talented people. With a wider availability of options, people began switching organizations with ease, often across industries. Once again, faced with limited choices to hire top talent, organizations often appointed leaders in positions where they had limited or no experience (in terms of leadership, not domain expertise) and sometimes even when they had yet to prove their ability to deliver results in their present positions.

While I am loath, without empirical evidence, to ascribe the perceived lack of a work ethic among today’s employees to either of these two trends, it is possible that they have played an important role in the demise of the work ethic as defined by the CEO whom I have quoted.

The question here is: can external environmental factors be blamed entirely for the lack of a work ethic among employees to the organization they work for? Or are there also factors within the organization that can influence this trend one way or the other?

While I’d welcome a debate and discussion on this and am eager to hear from readers about their thoughts and experiences, based on my experience I believe that the organization itself has a large role to play in this matter.

My next post will expand on the role of the organization in creating and sustaining the work ethic and a simple exercise to help you determine how effective your organization is in this matter.

Managing in a downturn : Mistakes CEOs make - Marketing Budgets

The other area that CEOs seem to find convenient to axe in difficult times is the marketing budget. I find this a bit of a paradox. Why, you may ask?

The answer is simple. Everyone knows and agrees that marketing is essential to build brands, establish positioning, create differentiation, influence perceptions and preferences and build consumer loyalty. But aren't these the very things that are critical to focus on in a downturn?

When the environment goes downhill and consumers become selective about the products and brands they purchase, it becomes even more important to ensure that the brand is visible and the consumer's purchasing behaviour is influenced in its favour. Surely no one believes that in such a situation, cutting marketing expenses will help in increasing brand visibility and brand preferences?

Then why slash marketing budgets in a downturn?

Perhaps, because it is an easy way out. Operating costs cannot be slashed without serious implications for productivity, quality and revenue. Payroll costs can be reduced and I've dwelt on that already. Real estate and administration costs cannot be reduced quickly in the short term without a negative impact on the business. So it is marketing which is the only significant cost that can be reduced without a perceptible short term impact.

Which gives rise to the question: if there is no significant or tangible short term impact, what's wrong with slashing the marketing budget?

The answer lies in the objective of marketing as I have defined it earlier. Marketing shows results over a period of time. Mid term to long term. The only situation where marketing shows results in the short term is when there is a tactical promotion like a limited period discount. Brand building, positioning, creating differentiation, influencing consumer behaviour and preferences and building brand loyalty are all results of marketing that are perceptible over a period of time.

Which means that cutting marketing budgets can have serious mid term to long term implications.

Another factor to consider is the lead time for marketing to have an impact. The results of marketing always show up over a period of time after the money is spent (this is also one of the reasons why the effects of marketing are only felt over a prolonged period of time). The best effect of marketing is felt in a consistent marketing campaign. Breaks in a campaign may be strategic, when they are used to reinforce the campaign and strengthen the brand. But this applies by exception.

What this means is that a break in marketing, especially in a downturn, sets the product and brand back a bit. When the marketing budgets are restored, it will take time to re-establish the results that had been achieved at the point of the break.

So, what's the answer?

One way an organisation may tackle this conundrum is by being highly selective about the deployment of marketing funds. Marketing strategy has to be highly focused on the most effective means of achieving results without a break. Metrics to assess the ROI on marketing campaigns must be stringently enforced. A good marketing department should, in any case, be tracking the ROIs on different marketing options, even in good times. So, when it is time to reassess the marketing strategy, it becomes a fairly straightforward exercise to look at the various options, analyse the metrics and then zero in on those marketing actions that are most successful with the least expenditure.

This process of weeding out the least effective options will help organisations in a downturn to optimise their marketing expenditures without compromising on results. Also remember that while everyone else is cutting their marketing budgets, there is much less clutter in a downturn. Which means that if you are sensible about how to optimise your marketing spend, you automatically become more visible.

Now, isn't that a great situation to be in?