As the organization grows, expectation of the stakeholders also grows, at times more dramatically than the business itself. Shareholders expect higher profitability and return on their investments while employees are looking for higher salaries and benefits. Customers demand the best product at the lowest cost with unprecedented levels of service and support. Balancing these conflicting demands and yet sourcing enough funds for investments for future growth is like tightrope walking. Authorities are looking for increased tax revenue and the company must also meet its corporate social responsibilities. Some of these are conflicting and difficult to manage. Let us evaluate each of these conflicting demands on the company management in more details.
Customers – Probably the most important segment of all who ultimately decides the success and failure of an organization. In a highly competitive market place when the customers have multiple choices to decide from, they can be extremely demanding. Customers are looking for products with most advanced technology at the lowest possible price and on-demand service and support, preferably free of cost throughout the life of the system. Companies have to constantly reinvent themselves to remain competitive and be successful as none can be the leader in all the three areas of technology, price and process/service.
Technology challenges – this is a double edged sword. Customers are always looking for products that give better results, faster, easy to use and smaller. But it must also be easy to learn and implement. Imagine the struggle many organizations have to face when they introduced computers for accounting or similar applications many years ago. Besides maintaining ledgers manually for many months managements have also to confront aggressive trade unions resorting to strike fearing their jobs due to automation. Considering the rapid progress in technology, such challenges are magnified manifold more so when one is dealing with organizations working under regulatory controls such as pharmaceutical companies or food testing laboratories. Hence the challenge is on you to ensure that the users are successful in using the products and getting better than expected results without interrupting their day to day activities. This is like changing the tyres when the car is still running.
Price challenge – India is generally a highly price conscious market and we Indians enjoy hard bargaining whether we are buying high technology products or vegetables. If you are sales manager, you would have certainly heard these kinds of statements from your sales man
This is a Government customer and has a fixed budget. Therefore we must reduce the price to get the order.
This is a university customer and has very limited budget. However we will benefit in the long run as the students who use our system will become users or managers in due course of time and will buy our products. Hence we must take this order at any cost.
This is a big buyer and is planning to buy multiple systems this year and how can we ever miss such an opportunity. The customer prefers our product but if we do not meet his price expectations, the order will be taken by our competitor.
Ultimately it is up to you to decide whether it makes business sense to take the order at the price the customer demands or leave it, taking into consideration the overall internal financial guidelines and external market conditions. You may also feel that all the competitors are unreasonable and do not follow common sense business policies or else how could they offer such low prices and special prices to the customers when situation does not really demand such things!
Process/support challenges – when you describe a customer, who actually you are referring to? Is it the end user? Her Manager? The General Manager of the dept. or the Vice President of the Division? Or is it the Purchase Manager, Finance Manager, Vice President of Supply chain Management? Or is it someone at the “C” level executives such as the CEO, CFO, CIO, CTO, etc? The process and support challenges are unique for each of these groups and must be managed to ensure overall customer satisfaction.
If the end user is successful in using your product, she will always support you. Successful here actually means not that the equipment is working OK, it means the product/equipment gives absolutely trouble free operation and the results are better than expected, maximum uptime of the system and if ever there is a problem it is attended and solved at the shortest possible time and the support is excellent, effortless, less expensive and hassle-free. She is provided frequent trainings free of cost to improve her knowledge and skill sets and additional training programs conducted whenever there is attrition.
The purchase manager will take all the time in the world to decide and will also call you for discussions and negotiations for the nth time, but once the order is placed she expects the delivery yesterday! Forget the payment terms or delivery commitments in the offer!
The finance Manager expects maximum discount, 180 days credits without guarantee, and not to charge for freight and insurance! Warranty should be for the life of the system!
“C” level managers are looking for better return on investments, improving productivity and quality and saving in time and manpower. If your products can meet those expectations, you are the winner!
Finally you need to sell your product, meet your company expectations in terms of margins and short and long term profitability targets!
Employees Expectations – Attracting and retaining highly qualified, skilled and experienced knowledge worker is one of the biggest challenges of a fast growing medium sized high technology company. In a growing economy, employment opportunities are easily available as existing companies are growing and new companies are being set up every day and they all need additional manpower. Though India is producing the highest number of graduates and post graduates, English speaking professionals, none of them are trained or skilled to meet the specific needs of any company or industry group. However those with two or three years of work experience become highly valuable and can demand 50% or more increase in salary for a switch and gets it easily. Because of our demographic structure where almost four generations of workers are in the industry, meeting every segments expectations and needs are another big challenge for any company management. Young, professionally qualified, below 30 employees are looking for highest “take home” salary, learning opportunity and fast career progressions. Those above 40 years need good salary, responsible managerial positions, stability and long term benefits such as pension, gratuity, superannuation, etc. 30% and above attrition levels have become common in many fast growing high technology companies and that has become a major impediment to sustain the pace of growth. Since employees have option and do get their way today, many do not think about the future.
Why is Indian economy growing today? It is mainly because the labour is cheap here! Multinational companies transfer their work to India as they are able to get their job done at equal or acceptable quality levels at a fraction of the labour costs in the USA or Western European countries. But at the current rate of increase in salary and benefits, we will certainly loose that advantage very soon, in the next 10 to 15 years’ time! In many high technology companies the salaries would have gone up by more than 5 times in the past 10 year! Few cases even more than 10 times! While the salary increase in developed countries have stabilised to less than 2% a year! Since every company needs experienced and competent employees to sustain their growth, the management succumb to the pressure today but may be they are mortgaging their future opportunities!
Share holder expectations – one can keep arguing as to who is the most important stake holder of the company. Some will say it is the customer, as without the customer no company can grow! Some will say it is the employees as they are the group that runs the organization! But we all forget that without the shareholders, there is no company! And therefore they are the most important stakeholder and must be taken care of properly by ensuring that the market value grows year after year and dividends are paid out regularly. Growth in share prices are depended on EPS (Earnings per share) and therefore the company management must ensure that there is constant growth in the absolute and percentage profits of the company! To increase profits one must increase revenue, increase gross margin and reduce expenses. Increase in revenue can only be done by selling more to the existing customers or finding new customers or new markets. In a competitive environment, margins are always under pressure and your managerial ability is always under question when the gross margin is in the decline! For many high technology companies, the salary and travel forms the biggest percentage of expenses and is always on the increase! As a CEO of such a company you will be doing a tight rope walk in balancing the demands of all the important stakeholders of your company!
Government, central/state/local – every one of them is looking for additional revenue whether it is for developmental purposes or other purposes. Every company have to pay Income tax, central excise, central sales tax and state sales tax, service tax, entry tax, octroi, customs duty, etc for all of their business transactions. There is also professional tax, ESI, provident fund, shops and establishment tax, factory licence, environmental clearance, you name it and we have it. If you delay or miss making any payments on time then you end up paying a heavy penalty for such a lapse and at times you get a feeling that the authorities are waiting in the wings to catch you the moment you get something wrong rather than help you do everything right!.
Corporate social responsibility – this can be interpreted in many different ways! It includes meeting the expectations of all the large political groups, small groups and sub groups, meeting the expectations of various religious groups for their festivals or construction of places of worship, and many more! All need money for their activities and you may get into troubles if you ignore their regular demands.
As a Manager of a fast growing high technology company, your success is in meeting or exceeding the expectations of all these stakeholders and as you can see, it is not always very easy as they are not complimentary!