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Six Ideas for Managing Organizational Dynamics to Support Customers

February 8, 2012 Finance

Six Ideas for Managing Organizational Dynamics to Support Customers Dave Garlock

Managing commercial, government, or not-for-profit Customers is one of the most challenging and daunting tasks that Supplies undertake on a daily basis.  The relationship is a continuous cycle of product innovation, marketing, sales, order fulfillment, payments and service.  The cycle requires a focus on execution, delivery and follow-up to maintain a profitable and productive relationship.  Each part of the cycle is a potential point of success or failure in the Supplier’s quest for operational and financial prosperity.  Customers are precious assets in which the Supplier has invested much time and effort, but easily can be lost due to unfulfilled expectations and promises.

Everyone in the Supplier’s chain of command has a responsibility to work together to ensure that the Customer’s expectations are clearly understood and met.  Any impediments to delivery of the Customer’s order must be communicated and resolved internally among the Supplier’s team.  If the impediments cannot on be resolved requiring alternative actions, then prompt and honest discussion with the Customer on a corrective plan of action must occur. 

The internal communications must span all affected functional areas:

  • Marketing, sales, procurement, finance, operations, and product development staffs in central and remote offices,
  • factories or field operations,
  • warehousing and logistics, and
  • service functions.

The ability of the Supplier to meet Customers’ expectations is dependent on the effectiveness of the organizational dynamics of the Supplier.  Corporate mission and value statements are prolific among companies.  Unfortunately, many organization fall short of their stated “purpose” due to written or implicit contradictory policies, practices, behaviors, and incentives existing in the Supplier’s workplace.  Often these contradictory activities may be allowed or encouraged by leadership at all levels within a Supplier that disconnect their daily activities from the “purpose” statements.

As an example, certain metrics used for different departments may be conflicting causing unproductive tensions between functional areas.  This tension can change the focus of each functional area’s efforts from taking care of the Customer to protecting “turf”. This protectionism often results in the “silo effect”. In their individual silos, each area may hunker down in a virtual bunker and fight to serve its own means, not the greater good of the organization – meeting the Customer’s needs and expectation.

To avoid the development of or to manage current destructive tensions and dysfunctional attitudes within the organization, the tone and governance of organizational dynamics has to come from top leadership and be infused throughout the organization. Senior leaders must lead collectively with an attitude to “walk the talk” and respond immediately to curb any apparent discord or subversive behaviors.  Everyone in the organization must stayed focus on the Customer and work to resolve issues.

Here are 6 ideas to consider in managing the organizational dynamics:

  1. The CEO, CFO and other key senior executive need to speak with one consistent voice to their Customers, suppliers, lenders and associates within their organization.  Senior management must agree upon and believe in a set of strategies and priorities upon which resources are committed.
  2. Commitments to Customers for pricing, quantities, delivery schedules and service must be consistent, economically reasonable and deliverable.  Commitments today often reset the relationship for the longer term in regards to pricing, product availiability and service. 
  3. Dissension among functional area management teams on tactics, priorities, and resource allocations must be addressed and resolved immediately.  Do not allow disagreements and distain to permeate and become ingrained in the corporate culture.
  4. Incentives plans should be heavily weighted on the overall achievement of individual goals that are aligned with the organization’s priorities. As an example, sales incentives should focus on profitability, not gross sales, and encourage collaboration with production and finance to ensure realistic pricing and delivery promises are set for Customers.
  5. Sales and production coordination meetings must be held frequently as sales orders are assessed and commitments are determined within the constraints of production capacity, material or staff availability.
  6. Regularly scheduled receivables management meetings must be held among sales, collections and senior management to discuss any customers who are stretching credit limits or terms.  Responsibility for resolving issues must be shared by all parties using an agreed upon sales and collection strategy.

In summary, the key to managing organizational dynamics is to set organizational boundaries and guidelines for satisfying the Customers’ needs and expectation on a consistent basis.  Some of the greatest failures in many Suppliers are the inability to:

  • manage the internal dynamics of the organization,
  • facilitate communications among the constituents within, and
  • provide coordinated directions to functional area. As a result, functional areas end up competing rather than collaborating for resources.

This is not an easy task.  Sometimes, the management team may require additional skill sets on a temporary or permanent basis to assess and address organizational dynamics.  However, once installed and maintained, these management behaviors can increase the probability of future prosperity.

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