MANUFACTURING PROGRESS: TAKE THE LONG VIEW
In my role, delivering C-Suite and Senior Management talent into an international manufacturing client base, I occupy a privileged position whereby stakeholders – be they clients or candidates – share their insight, challenges and, often, frustrations. This is always clearly done from a position of mutual trust and, while anonymity is never compromised, I notice trends and commonality in the challenges faced. These challenges are worthwhile sharing to open up a debate.
A recurring theme this year has seen an emerging requirement for change agents to embed into organisations to deliver transformation; only for those individuals to find a hierarchal resistance. Subsequently, such individuals find themselves operating with their wings clipped, unable to deliver to their capability level due to corporate constraints. These individuals find themselves inhabiting a space where short-term thinking prospers over long-term sustainable ambition. So, what are the gears that create such an environment and what can an individual change agent do to circumnavigate the inevitable obstacles?
Underpinning the short-term thinking that is so prevalent in UK & US Manufacturing firms, and to an extent more widely in global manufacturing, is the economic hangover, post the 2008 Global Financial Crisis. With so much shareholder value wiped into oblivion so quickly, the world has witnessed a prevailing hesitancy from investors to hold stock for any significant period of time. Current thinking on timing fluctuates wildly, but there is consensus that the average stock holding period in the 1960’s was around eight years. By comparison, speculation ranges today between four months down to an eye-watering 11 seconds. Such fleeting, twitchy investor behaviour cascades a pressure and immediacy on CEOs to continuously deliver month on month, quarter on quarter, incremental growth across all commercial and operational KPIs. This undoubtedly contributes towards a culture where profit is king, at the expense of the companies’ culture, their customers and, ultimately and perhaps most worryingly, the wellbeing and sustainability of their employees.
When manufacturing companies focus on the short-term, they direct profits to shareholders immediately (succumbing to shareholder pressure), instead of spending money to improve productivity, which is ultimately the most significant driver of growth for the wider economy and companies within. Typically, with this mode of operation, businesses spend less on research and development for future generation products, less on capital investment to improve production efficiencies, less on employee development, and less on environmental and corporate social responsibility. It is fair to say that CEOs will have to have incredible resilience, and take somewhat of a visionary stance to combat such pressure, and perhaps a re-thinking of incentives is required to combat the problem. What is certain is that the prevalence of such short-termism impacts production capacity negatively, due to limited investment, and can contribute to a fire-fighting environment, where leaders are constantly moving from one crisis to the next. It is at this point that we see scapegoats being manoeuvred out of businesses, as opposed to tackling the systemic broader issues.
I am not offering any solutions, as there clearly needs to be an ideological shift. Looking at the senior appointments I have led over the past 12 months, for organisations ranging from smaller PE/VC backed to large UK/US multinationals, there seems to be an increasing awareness across C-Suite of the perils of short-termism in Manufacturing. To combat short-termism and in correlation with The Harvard Business Review 2017, a common theme I am hearing from C-Suite, is that business leaders must tell a compelling story that outstrips financial performance; where vision and values are the focus that underpin sustainable value creation. This, in combination with CEOs having the fortitude to set realistic financial targets by comparison to inflating targets to drive immediate but unsustainable performance, are undoubtedly two critical aspects. So, to those individuals engaged to transform business practices in any capacity; you would do well to test the leadership against the aforementioned aspects in order to guard against being an expensive, highly visible, but ineffectual change agent. To C-Suite stakeholders looking to engage an increasingly savvy candidate population, who understand implicitly their ability to create positive change, be it people, process, performance or profit; you would do well to have a compelling story and strategy to circumnavigate short-termism in order to secure the best talent in the market.
?Holmes Noble is a personal and progressive executive search, interim and talent firm led by a team of highly experienced sector and functional experts. Ben Gilbert leads Holmes Noble’s Manufacturing Practice recruiting nationally and internationally.