Leadership

Are companies that purchase ancillary services from their auditors more likely to manage earnings?

A down economy is not the time to “slash-and-burn,” but rather to ensure growth potential during the ensuing rebound. This requires a focus on strengthening key relationships, capitalizing on underutilized staff, clarifying strategic roles and forging stronger links between compensation and results.” More than 20,000 times last year, midsize and large U.S. companies responded to adversity by slashing on average 100 staffers at a time. It’s a safe assumption, says compensation consultant Jeffrey Oxman, that many of those organizations destroyed value by cutting capacity they soon had to replace, by making poor choices as to who should go and who should stay, by failing to communicate the rationale for change so as to keep surviving employees motivated, and by missing the opportunity to rethink their business model to optimize their positioning for the recovery ahead. Such issues, says Oxman, go beyond the question of layoffs; they go to the heart of how companies can avoid lasting damage and build long-term value. The conventional wisdom is suspect. Recessionary economies may not require re-engineering or moving noncore competencies outside the organization for greater efficiency. Oxman suggests four critical ways to prepare for economic recovery: strengthening key relationships across customers, employees and shareholders; leveraging downtime by capitalizing on underutilized staff for innovation initiatives; refocusing staff on what’s important by prioritizing strategic roles and clarifying individual goals; and building return on compensation by forging stronger links between pay and results.

Walking the fine edge between efficiency and consensus.

IT professionals may be uniquely positioned to see and affect a company's "big picture."

Forget capital; it’s relatively easy to obtain nowadays. Today’s scarce, sought-after strategic resource is expertise, which comes in the form of employees. Although organizations have changed mightily from the days of hierarchical, top-down management, they still have a long way to go. In addition to issues of company structure and who should be involved in strategic decision making, there are questions of how the value that companies create should be distributed, now that employees, as well as shareholders, control a scarce resource. And then there are the intangible yet crucial changes that must occur in senior managers’ ways of thinking & #8212; and in the atmosphere and culture of the company. Reorienting old-school senior managers away from capital and toward knowledgeable employees will be difficult, but Christopher Bartlett of Harvard Business School and Sumantra Ghoshal of London Business School have several recommendations for human-resource professionals, who, Bartlett and Ghoshal maintain, will be key players in the design, development and delivery of strategy. Their task is threefold. First, they must build up the company by acquiring and retaining highly skilled employees. Second, they must find a way to embed individual-based knowledge in the company, making it accessible and useful not just to one unit or one function, but to the entire organization. That is the linking task. Finally, there is the bonding task: HR managers must create an engaging, motivating and bonding culture that will attract and keep talented employees. With people in ascendancy over capital, say the authors, it is time to recall what a company actually is: a social institution designed to engage people in the achievement of a valuable and meaningful purpose.