Dealing with uncertainty and the unknown in organisations
by Christian Kurmann
People find uncertainty itself more stressful than all the things they are actually uncertain about. We feel worse when we think that something bad might occur, than when something bad actually occurs. It is the not-knowing that unnerves us.
Therefore, uncertainty within organisations contributes to high levels of anxiety, which contributes to poor health and low work performance. However, employees are usually able to handle cutbacks in spending, negative feedback, lower quality products and services, loss of market shares, etc., as long as they know the truth and that management has a plan for resolving those problems to achieve success. Most employees are uncertain when they do not receive any feedback from their managers, as they don’t know how their work is viewed. If there are no clearly defined strategic goals, employees are uncertain about where the organisation is heading and if it will reach financial success. Furthermore, the ever-changing environment of an organisation contributes to uncertainty to some extent. For example, we are all aware of the current economic circumstances, which continuously demand new and different approaches. It is always difficult to forecast organisational performance. Traditionally, organisations made use of strategic- and long term planning. The modern tendency to survive is to rather focus on short-term performance, working force management, cash protection and business survival.
Organisations continuously face challenges in the economy, as suppliers, customers and competitors produce and consume services and products in more imagi- native ways. Global trend changes involve the mass production and customisation of products and services, outsourcing and customer self-help services. These trend changes expose all the inefficiencies of traditional organisational processes. Managers need to realise that change and uncertainty are the only constants in any organisational environment.
Strategic organisational planning was usually vertically aligned from the top down, which worked well in a strong and healthy economy and stable markets. Lately, it is better for organisations to align business plans horizontally between the different sectors, as unpredictable economic conditions require a more responsive and integrated management response. This can only be achieved if all the functional sectors work in alignment with each other in the overall operational and functional planning.
In order to initiate an organisational change of heart, leaders and managers must first realise and accept that traditional management styles aren’t necessarily effective anymore.
Traditionally, organisations built up their budgets and strategies along functional and vertical lines, because that was the way society was structured. And we stick with that as most people are unconsciously very reluctant to alter their perceptions and beliefs. They have difficulty letting go and are hesitant to embrace new ways of thinking and management. However, business processes do not follow functional boundaries. Therefore, in order for organisations to deal with uncertainty, managers need to become less self-centred and rather value team efforts throughout the different sectors and levels of their organisations.
Spread sheets are a powerful tool for personal productivity, but they have certain shortcomings in an uncer- tain organisational environment. They are unable to create a multi-dimensional perspective, which is critical for multiple planning scenarios. They are also complex due their formula-building and maintenance. Independently generated spread sheets will not improve work flows within the organisation, but need to be linked closely through each functional area. Disconnection will make it difficult to share plans, resolve planning conflicts in a timely manner and to respond efficiently to change.
If organisations want to bring about change in order to deal with uncertainty, they need to effectively and equally combine people, process and technology.
Teamwork is the key to increasing productivity and will help remove organisational and geographic barriers within the planning process, as well as bring about unrestricted information flow. This allows for negotiation and dialogue around plans at every level of the organisation, management review and problem solution at an early stage, which in turn relieves pressure in dealing with uncertainty. Only when there is a wide range of forecast scenarios, based on different assumptions, can an organisation effectively deal with risks and uncertainties. However, as an organisation cannot practically work with all the variables and risks, managers need to identify which ones are the most important and focus on them.
Providing the necessary enabling technologies and processes is one side of the organisational coin, but integrating human behaviour is the more unpredictable other side. Most organisations couple planning, budgeting and forecasting with their employees’ remuneration and bonus schemes. Planning and budgeting are a combination of the full range of human emotions and responses, as well as hard-core business decision-making. These issues are especially increased in organisations where leaders have to step out of their own comfort zones and traditional beliefs in order to deal with uncertainty within the different functional areas.
In summary, organisations are faced with managing exceptional change and responding even faster to the unpredictable consumer demands and market uncertainty, as well as the expanding requirements of the networked global economy. Traditional approaches, where different sectors and levels work in isolation and are supported by inappropriate spread sheet technology, place organisations at a severe disadvantage in terms of making accurate and timely decisions in changing circumstances.
In contrast, progressive organisations are actively seeking the benefits of an inter--functional capability in which planning efforts are aligned and integrated. This approach requires investment in enabling technology that provides the platform for integration, increased productivity and data management tools to improve and maintain data quality.
If managers within organisations can keep their fingers on the pulse, they can reduce planning duplications and accelerate decision making. This will ensure that the organisation’s financial performance is more secure and dependable – regardless of market volatility.
Uncertainty can pose both challenges and opportunities to any organisation. When managers deal with their own fears towards change, uncertainty poses a wonderful opportunity for both personal and organisational growth. Managers should prepare for multiple outcomes, as there is no substitute for awareness, listening and sensing problems as soon as they happen – while remaining agile and striving to respond quickly.
If organisations focus on doing the right thing and building trust between employees, customers and stakeholders, they can prepare for successfully dealing with uncertainty.