Changing focus within your workforce can significantly increase the value of your business, writes Catherine Corcoran, Head of Management Consulting at RSM Ireland.
Peter Drucker, the Austrian-born American management consultant whose teachings laid the foundations for the structure of modern business management as we know it, was never in any doubt about the importance of respecting the workforce. He believed that employees are assets not liabilities and that knowledgeable workers are the backbone of every successful business. Post-recession with the industry facing a severe skills shortage, this is of particular relevance to the construction sector.
Traditionally, when it comes to valuing your business, a financial model is used to arrive at a figure that best represents the value of your business. However, a good deal of other factors come into play. This is why HR, Governance and Technology Due Diligences are becoming increasingly important factors in reaching the decision to buy a business. A healthy Culture, strong management team and an engaged workforce are key factors in making a business both profitable and valuable.
Drucker famously said that “culture eats strategy for breakfast”, a favourite in corporate speak that has come to epitomise the importance of valuing ideas, customs and social behaviour at work. To be clear, he didn’t mean that strategy was unimportant – rather than a powerful and empowering culture was a surer route to organisational success – and an accompanying increase in value!
RSM Ireland subscribes to this ethos in every way from our own workplace culture to the advice we give our clients. We urge companies to look at how they do business to form a better understanding of themselves.
How to maximise Value through your people and culture
For a business to maximise value through people and culture – we here in RSM recommend that certain requirements must be adhered to.
- Adapt to and be open to change – be resilient
- Have real conversations.
- Understand where your business is at and where you want it to go.
- Have a good sense of who you are and how you want to do business – the mission and values piece.
- Adopt an integrated inclusive approach across Finance, people, marketing and operations – it’s not enough to do just one well.
- Ensure you have both operational plans as well as strategic plans in place.
- Adopt a fit for purpose management system that will ensure your strategy and operational plans are executed – the accountability piece that done well feeds into a positive culture.
- Ensure that you have engaged people and engaged customers.
- Develop your people – creating self awareness is key.
- Nurture your customers.
Building value through your people and culture is a ‘key’ challenge for the construction industry. It is an industry which is facing a major shortage of skilled labour. The CIF’s Demand for Skills in Construction report estimated that the industry will have to fill about 112,000 vacancies by 2020 to meet planned construction jobs. The reality now is that there is a serious shortage of suitably-qualified graduates and skilled workers to fill these roles. The construction industry, like many other industries today now need to re-think and re-energise their employer brand in order to compete for talent.
Construction Companies can use a well thought out ‘people strategy’ and a progressive ‘culture’ as a way of attracting talent – and once you have it, you can use this talent to further ‘cement’ your healthy ‘people culture’. The opposite of the vicious circle that can exist where you attract people only for them to leave or become disenfranchised and demotivated by an unhealthy ‘workplace culture’ and ‘poor management systems’. The command and control type environment of the past needs to be replaced by a more ‘autonomous’ one.
Top talent today will gravitate towards organisational cultures where they can both add value and be valued so now is the time to start maximising value through organisational culture.
Let’s not forget your customers! In a way. For a business to maximise and make the most of their value, the customers must also be nurtured. A customer should feel like there is an understanding of what they need, and they feel valued in all transactions. You can’t over estimate how important it is to engage and understand both customers and your people. If a business takes the time to do this, you will find the business will undergo a strong learning curve that will allow for a more productive restructuring within the organisation. That will create a deep sense of understanding for all involved.
Your workplace will be a happier place for all – and more valuable!
Article as featured on www.cif.ie.