Almost a year ago we have published our thoughts on what will be important to focus on during the pandemic when selecting people into leadership positions. There was one thought at the end of the article where we argued that:
Playing it safe will be dangerous.
Well, let’s look at what we have witnessed so far. Maybe surprisingly the most active industrial sector that we have worked with in the past year was manufacturing. Given the government policies that were in place during the first 6 months of the pandemic, I would say that they have chosen to play it safe in the beginning. For a few months, growth and restructuring plans have been put on hold. Coming September, costs were piling up, strategies have changed.
We could see that there were two distinct avenues companies were taking at that point. Some decided to go the cost cutting route and expected fall in demand for their goods. They were surprised when demand has recovered during the fall of last year. It caught them off guard so much, that they had to introduce extra shifts in their factories. The fallout from that has been dramatic. As the restructuring and expansion plans have all but collapsed, the current pressure does not give them time to catch a breath from operational issues. Morale is collapsing, people are overstretched, leaving, and costs keep piling up.
Let’s skip over to another manufacturer. In the beginning they also took advantage of the government programs and adopted wait and see strategy. Coming September however, they understood that if they ever wanted to execute on their plans to grow and prepare for the future the time is now. Like for every manufacturer, their biggest weakness is lack of human capital. So they put together a campaign and a program to attract both junior and senior management from all over the country. Their aim is to invest in succession planning now, when they assume they will get the biggest return on their effort. Being privately owned, the company has inherent advantage. They don’t have to look ahead for few months at a time, they are looking several years ahead.
The difference that I see between them is that one is privately owned and one is part of a large global corporation.
This is not to say some ownership structure is better than another. It is that from our perspective the privately owned firms were able to exhibit more flexibility in changing tactics to execute long term goals.