Cohesiveness: Getting the Team Spirit


One obvious determinant of any group’s structure is its cohesiveness—the strength of group members’ desires to remain part of their group. Highly cohesive work groups are ones in which the members are attracted to one another, accept the group’s goals, and help work toward meeting them. In very uncohesive groups, the members dislike each other and may even work at cross-purposes. In essence, coheviseness refers to a we-feeling an esprit de corps, a sense of belonging to a group.

Several important factors have been shown to influence the extent to which group members tend to “stick together.” One such factor involves the severity of initiation into the group. The greater the difficulty people overcome to become a member of a group, the more cohesive the group will be. To understand this, consider how highly cohesive certain group may be that you have worked hard to join. Was it particularly difficult to “make the cut” on your sports team? The rigorous requirements for gaining entry into elite groups, such as the most prestegious medical schools and military training schools, may well be responsible for the high degree of camaraderie found in such groups. Having “passed the test” tends to keep individuals together and separates them from those who are unwilling or unable to “pay the price” of admission.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Facing up to Deficiencies


Many companies fail to objectively evaluate their products against competitive offerings in a rigorous manner. If they do go through some kind of an evaluation process, it is often superficial or biased, leading to a continuation of “business as usual” rather than dramatic cost or performance improvements. In some cases, management is not presented with the real facts because it is easier not to “rock the boat.” In other cases, management may see the facts but not accept or face them squarely, since it is not easy to admit that a product is no longer competitive. As a result, a surprising number of companies continue to try to get by with products that are not competitive and they fail to make the fundamental, essential changes in design or cost.

There are two important points that successful companies always follow. First, it is essential to ensure that products are designed for efficient manufacturing and assembly. Second, “me too” parity is never a solid basis for gaining or regaining position. Technical programs should always be designed to leapfrog the competition rather than play “catch up” against moving competitive targets.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

Managing Cash and Liquidity


In a turbulent environment, cash returns are important, if not more important, than reported profit returns. Cash returns lead to liquidity, and liquidity is a top priority consideration whenever risks and uncertainties surround a business situation, as they do in so many cases today. Cash and liquidity put any company in a better position to withstand a surprise blow, adapt to sudden changes, and capitalize on the narrower windows of opportunity that are commonplace in a turbulent environment.

This doesn’t mean that profits and profit growth are not important. The whole purpose of any business enterprise is to maximize profits and profit growth, but this objective will  not be achieved if business unit managers do not focus more time and attention on managing their cash and liquidity. Any entrepreneur that has lived through a start-up knows the importance of cash and liquidity. The entrepreneur knows from experience that a business can go bankrupt even while it is reporting profits. But it will never go bankrupt as long as its cash and liquidity positions are strong. Most corporate executives understand this point also, but many do not follow through to make sure it is sufficiently stressed or understood at the operating level. This is where the problem lies. Most business unit managers who operate under a corporate umbrella tend to overlook the importance of managing their own cash and liquidity and look instead to the corporation as a never ending source of funds.

The results are apparent in most corporations. Capital expenditure proposals tend to be a “wish list” often justified on project volume gains or cost savings that never occur. Working capital is allowed to build without adequate regard for carrying costs on the cash commitment. In short, overinvestment in plant and equipment, and working capital often serves as a buffer to cover sloppy business practices and control. These are practices that inevitably lead to an investment base that is too big for the business and to marginal profit returns.

Many operating managers in a corporation are not even aware of the costs incurred while excess capital is tied up in the business. This is not an exaggeration. Just ask any four or five business unit managers how much it costs to carry their inventory. Most of them will acknowledge an interest cost of, say 7—8 percent, but few will recognize that total carrying costs, which include storage, taxes, obsolescence, and shrink, actually run closer to 30 percent in today’s environment. We would also bet that none of them have such charges against their earnings, even though it is a very legitimate cost of doing business.

Not every company operates this way. Most corporate executives are not tough minded or rigorous enough in challenging cash commitments, and most business unit managers have more cash tied up in their business than required.

Ideally, every manager should think like a small business entrepreneur with his or her own money at risk. If this were the case, we would not see so many companies with bloated balance sheets and marginal returns. Left on their own, most business unit managers do not think this way, however. Life is not easier when you can draw almost at will on coroprate resources to meet the payroll, build inventories, and buy supplies, tooling and a lot of equipment. Under such conditions you don’t have to worry very much about how to make ends meet.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight