Effective leadership that is rooted on employee motivation, customer focus, and proactive holistic consideration of the business strategic design forms the best tool for success during hard economic times. This is mainly due to the need for effective coordination, harmony and intrinsic satisfaction of all the stakeholders in a business entity to reduce the overall impacts. Owing to this harmony, employees are able to work from home, put more efforts, reduce their pay instead of lay offs, and innovate new mechanism for success. The current economic crisis has been described as one of the worst to have ever hit the world.
Most of the companies have resulted to survival strategies as opposed to success missions previously established in their management plans. Therefore, a coterminous option that explicitly gives business success connotation and reduces the overall backward shift is very welcome to most of them. Over view the paper Hard economic times is the period when there is general slow down in economic activities over a sustained period of time. As a result, the overall buying power of the people denoted by GDP declines drastically. Consequently, companies reduce their production due to the reduced extended demands for their goods and services.
Investment spending, employment, and capacity utilization shifts to a down wards trend that affects all sectors of the macro-economy. This paper explores leadership of business during this period of hardship with an aim of establishing the best models of addressing the problem. As an outcome of the hardship, the essay examines suicide levels and their linkages to economic hardship. Using examples, it extrapolates home based business, outsourcing and leadership designs to ensure higher chances of survival during this period. Over view and statistics
Current economic crisis has had negative effect to most of the economic sectors in the US. Though the current hardship effects were fully pronounced in the year 2007, the impacts had started creeping in much earlier. By February 2008, employers had shed about 60, 000 jobs in bid to reduce their overall operating costs. By the end of the year 2008 and March 2009, about 2. 6 million and 5. 1 million jobs had been lost respectively. Warning has already been given with extension in the number of emergency response systems to address the expected rise in the number of directly and indirectly related suicides cases.
This has prompted the new President to urgently give a stimulus package of US $ 775 billion in trial to arrest the situation before it gets out of hard (Clifford & Clifford, 2008). Home based business Whereas most people view economic recession as a possible death bed, entrepreneurs see a silver lining on the “thick cloud”. This period gives them the best opportunities to entrepreneurs innovate and realign new systems of operation that would give industrialists and companies the best options to maximize their sales while reducing their overall cost. Home based businesses are small enterprises operated from an individual’s home.
They are self perpetuating units that have a well developed scheme where companies are able to work with agents to market their products without extra ties with them. Notably, it is advantageous to the companies as they are only liable to pay for the work done and the results visible especially with regard to sales (Smith & Hitt, 2005). In Canada, the government is encouraging the people to venture into home based business, medium sized enterprises and other small scale businesses as an endeavor to stimulate the sagging economy. These businesses are easy to start, as they require less capital and have minimal maintenance demands.
To add to that, they have tax advantages and the operators are able to schedule their time around their own family needs (Economist Newspaper Ltd, 2008). LiveOps, West at Home and Avon work at home businesses LiveOps is a virtual call center company located in Palo Alto, CA. It has over 20,000 agents who work from home and perform tasks such as handling incoming calls and inquiries from buyers as taking orders for their companies. Similarly, Avon Company hires home based businesses to sell its products internationally. As a home based agent, one runs his own home-based PC, Internet connection, and telephone to take calls.
Under the system one is a contractor and therefore not an employee of the company. LiveOps pays between US $ 12 and US $ 15 per hour and also gives additional bonuses on the extra sales made. On the other hand Avon Home based businesses agents are given 50% commission on their sales that they make at any particular time. The contracting companies are therefore able to serve their client’s world wide on a 24 hour basis without running a brick and mortar call center (Clifford & Clifford, 2008). According to the West-At-Home home based business, their client companies are able to reduce costs up to 40% on their calls for marketing purposes.
In addition, the contracting company notes that most of the contracted agents work out of diligence and minimal supervision a system that boosts personal contribution, self control, and innovation culminating to high levels of satisfaction. Over 76% of the companies that use home based establishment for their marketing have registered great satisfaction. Suicides resulting from economic recession Though analysts have differed over the direct interlink between economic hardships and the number of suicides that are currently on the rise globally, there seem to be a general understanding of the recession’s causes of stress to the people.
Carl (2008) reports that according to the Iris Association of Suicidology, recession periods records increased rates of suicide in Ireland and globally too. He continues to say that Ireland recorded at least 460 suicides in the year 2007 alone making it the fifth country with highest rate of suicide in Europe. Notably, economic recession has affected most of the businesses resulting to losses, closures, and inability to clear credits incurred during the previous operations. On March 2009, the US government website indicated the warning signs of suicide for the victims of recession.
According to the department of health financial hardships brought by hard economic times never cause suicide directly, but they influence individual’s peripheral factors that result to feelings of despair, humiliation, and giving up that precipitates to suicidal thoughts. Psychologists point out that suicide is an advanced stage that occurs after one’s self consideration of his situation being the end of the road. Most of the affected people are confronted with immediate inability to cater for their dairy needs (Blakely et al, 2003).
The situation becomes even worse when the affected people did not have enough savings and had a family or siblings dependent on him /her. Such was the case with Rene-Thierry Magon who had invested US $ 2. 1 billion into Madoff’s scheme which reported to him that he had lost US $ 1. 4 billion of the cash due to the current recession. According to Monty (2008), Rene-Thierry could not cope with the pressure of losing such an amount. Analysts claim that about 50% of the suicide cases globally go unreported while over 85% cannot directly be link to their actual causes (Cliford & Clifford, 2008).
However, greater cooperation between the corporate sectors should be established to ensure that the directly laid down employees and other poorly hit people’s needs are effectively addressed as a measure to reduce the overall number of suicides globally. Future of leadership in changing times a) Increased cooperation between the management and the stakeholders Over the years, the demand for ethical leadership and subsequent reasoning that takes into consideration all aspects of stakeholders to safeguard their sanctity and integrity has heightened.
Though this balance is hard to maintain, it is considered to be the major test for effective leadership in an enterprise. Notably, they are supposed to ensure better coordination, harmony, consultation, and future orientation that focus beyond the recession period. According to the management of Southwest Airways, its overall profits rose during the year 2007and 2008 due to staff focus. Indicating the general cooperation from the management, the employees took the first step to propose their salaries and wages reduction (Bijan & Tom, 2008).
As other airlines closed and suspended their major flights after the New York World Trade Center terrorist attack, South West Airline lowered the prices of flights and embarked on major pans to restore the confidence of the people a decision suggested by the staff. As a result, the company has remained one of the best airlines in US to date. b) Creating teamwork and lean strategic management To effectively succeed in the business world, leadership should be able to gauge the overall business consideration through identification and emphasis on the strengths and opportunities to build on and minimize the overall threats and weaknesses.
As indicated earlier, businesses success during economic hard times will be dependent on the ability to work together as a team as opposed to disintegration through downsizing and closure of various projects. Therefore, all the systems should be lean and operate to the maximum capacity for the highest quality possible. All wastes should be reduced via adoption of better technology that reduces the overall energy demands for production without compromising the quality (Anthony, 2008).
c) Local and international outsourcing Whereas economic hardship will always recur globally and impact on the local market with similar or greater forces, outsourcing is recommended as a major system for reducing the negative impacts. Besides, it assists in enhancing recovery after recession. Outsourcing is a subcontracting process to a second or a third company either locally or international to enhance availability of products without transporting them from the mother companies.
Though the ethics of the system has been questionable for majority of the international companies due to their exploitative nature, the process reduces the overall transport costs, labor, and takes the products closer to the consumers at highly reduced prices. To add to that, many countries prefer subcontracting as it assists in creating jobs to the local people. According to Clifford & Clifford (2008), outsourcing is currently being adopted by companies like Coca Cola, Toyota Motors Company and Dell Company, Inc among others. It has been predicted to continue being adopted in the near future.
Increasingly, home based outsourcing has grown with speed due to its ability to reduce the overall cost of production and raise the efficiency of marketing and customer satisfaction (Tim & Michael, 2007). Conclusion Effective leadership rooted on shareholders intrinsic demands and based on the highest possible ethical orientation forms the best icon for success during the periods of economic hardship. As indicated in the above discussion, it is clear that leaders play a vital role in determining the direction which a business entity would assume during and after the periods of economic recession.
Notably, businesses should assimilate leadership that is both visionary and focused and that sees beyond the hardship in order to start planning for recovery (Hannum et al, 2006). To add to that, it should be rooted on new technology and lean demand that directly cuts down the costs even before the hardship has set in. Finally, organization’s future success should be outward based with a higher platform for outsourcing. Reference list Anthony, H. (2008). Understanding Strategic Management. Oxford: Oxford University Press. Carl, O. (2008).
Suicide set to rise with recession, Irish Times, November 13, 2008. Carr, I. &Stone, P. (2005). International Trade Law. London: Routledge Cavendish. Clifford, C. & Clifford, L. (2008). Strategic management: A broad outlook at the impacts of global recession and organization’s responses, Journal of strategic management, 12(25): 120-305 Bijan, V. & Tom, T. (2008). Introduction to Air Transport Economics: From Theory to Applications. New Jersey: Ashgate Publishing, Ltd. Blakely T, Collings SCD, Atkinson J. 2003. Unemployment and suicide: evidence for a causal association?
Journal of Epidemiology and Community Health 57: 594–600. Economist Newspaper Ltd, 2008. The Economist. New York: Oxford University press. Hannum, K. , Martineau, J. , Reinelt, C. & Laura, C. (2006), The handbook of leadership development evaluation, NY: John Wiley and Sons. Monty, L. (2008). Suicide Victim-Rene Thierry Magon de la Villehuchet. Independent, January 13, 2009. Smith, G. K. & Hitt, A. M. (2005). Great minds in management: The process of theory development. Oxford: Oxford University Press. Tim, R. & Michael, A. (2007). “Toward a model of strategic Outsourcing”. Journal of