Pressure points due to growth
Risk exposure calculator is an instrument that enables the apex management of business organisations to study the degree of internal pressure which exists with their organisations and can emerge as risks to the business of the organisations. The risk exposure calculator takes into account three categories of internal pressures which business organisations can be subjected internally namely, pressure due to business growth, due to work culture prevailing internally and the difficulty in managing information (Hbr.org. 2018). Belás et al. (2014) defines risks as uncertainties and challenges which are capable of effecting the business generation and/or its stakeholders. The paper would explore internal pressures which organisations face through lenses of risk exposure calculator (Attachment). The firm that would be studied would be Trading.com which is a fictional firm given the case study.
Business organisations are continuous pressure to expand their business to serev more customers and generate more revenue on order to give their shareholders higher returns on their investment. Gherhes et al. (2016) in this respect mentions that the growth needs often create immense pressure on business organisations, especially on the new organisations with limited business management experience. The organisation being studied, Trading,com belongs to this category and offers investment training courses to investors. The private company after establishing its businesses in Sydney, Melbourne, Brisbane and Adelaide, is expanding its business (Volery, Mueller and von Siemens 2015). This expansion needs has created immense on the company and has led to faulty decision making and staff management, all of which would cause internal risks which would eventually go on to impact the customer service and revenue generation in the company.
The first pressure or risk which businesses encounter during growth is pressure to perform and generate revenue. Sanfelici and Halbert (2016) mention that business organisations have to expand in the market to serve customers by keeping their normal business operations steady. Failure to manage business expansion and inefficient human resource management places immense internal pressures within these organisations. The organisation mentioned in the case study, Trading.com was seeking to expand its business into new markets after operating profitability in Sydney, Melbourne, Brisbane and Adelaide in Australia. Thompson (2017) in this respect mentions that apex management of the business undergoing expansions have to act as change agents to bring about the change effectively. It is evident from the case study that the management of Trading.com did not exercise strict control over its employees. First, the management set immense sales target for the consultants without consulting the latter or the managers. Secondly, the managers did not collaborate with the consultants in achieving targets and did not submit performance reports of consultants regularly. Thirdly, the managers did not have access to important databases and were left to evaluate the consultants solely on their sales reports. Fourthly, the case study also mentions that the company in order to manage the requirement of more consultants, compromised with the recruitment standards and acquired inefficient consultants. The consultants in the spate to acquire new customers, often did not maintain strong communication with the existing investors’ base. The outcome of the these weak management of managers and consultants was losing of investors which ultimately led to generation of low revenue due to losing of investors to similar share trading training organisations. Thus, it can be inferred from the discussion that inefficient management of employees and lack of empowerment among them results in poor performance in business organisations during expansions.
i) Pressure for performance
Business organisations should control their business operations strictly to ensure expansion towards business growth. Bocken and Short (2016) supports Sanfelici and Halbert (2016) and mention that business expansions create immense pressure on the existing resources. The business organisations have to acquire more resources to support their expansion. The apex management and the managers have to ensure proper management of the newly acquired resources. As far Trading.com is concerned, the management compromised on its recruitment strategy and recruited consultants without appropriate competencies to handle investors. Jackson, Schuler and Jiang (2014) in this respect point out that strategic human resource management plays a very significant role in management of employees including the newly hired to align them with the business needs. An analysis of the case study in the light of SHRM would point out that the management of Trading.com unable to manage the expansion of the firm recruited inefficient consultants. Thus, it can be inferred from the discussion that this inefficient HRM by the apex management created human resource risk within the organisation, jeopardising its rate of expansion.
Inexperience among key employees, especially the employees offering services directly to customers or clients can create revenue generation due to lack of satisfaction among the latter. Boon
The business organisations have to face pressure during critical phases like business expansion if they do not have strong internal employee culture. The following section would visit the pressures which organisations face due to cultural issues:
Entrepreneurs take risks in the business in order to earn high profits and achieve business growth. Aithal, Shailashree and Kumar (2015) mention that risk acts as a motivating factor for entrepreneurs to take business risks like competition from similar companies in spite of limited resources available to them. Santos, Pache and Birkholz (2015) contradict this statement and mention that the relationship between risk and business profit is not always true. The risk taking capability and achievement of profit depends on several factors like experience of the entrepreneur and organisational cultures with the organisations they command. As far as Trading.com is concerned, it can be pointed that the entrepreneur, Jospe Drake had an experience of three years. It can be pointed out considering the complex and vast size of the global stock market that his experience of three years was not sufficient to lead the firm in share market training business. Further, it can be pointed out that to certain extent due to lack of experience, Jospe did not concentrate on empower his employees including managers in taking long term decisions. The management of Trading.com set immense targets for the consultants and the managers did not collaborate with the latter in achieving the targets. In fact, the managers lacked access to critical business information. Strong internal rivalry developed among the consultants to achieve their targets and they did not cooperate with each other. The apex management did not take any initiative to strengthen cohesion among the employees and was only interested in their sales achievement. This weak hostile organisational culture prevailing within Trading.com led to poor business performance. Thus, it can be inferred from the discussion that failure to develop a strong organisational culture would only escalate risks to entrepreneurial ventures only eroding their profitability.
ii) Rate of expansion
The personnel holding executive positions within organisations are expected to deal with challenges and take appropriate steps to manage them. Wirtz, Tuzovic and Ehret (2015) point out in this respect that executive resistance to bad and adverse business conditions prevents efficient management of the challenges and issues, only leading to their growth. As far as Trading.com is concerned, the managers did not collaborate with the consultants to manage the investors. They did not assist or guide the consultants on management of existing investors. They only expected to their subordinates to follow their orders. This support from the executives of Trading.com along with the immense acquisition targets, placed immense pressure on the new consultants who lacked experience. Thus, it can be inferred from the discussion that resistance among managers to face and manage business challenges ultimately lead to poor business performance.
Internal competition among employees to a certain extent boost work performance however, beyond limit it actually lead to internal conflict. Goetsch and Davis (2014) points out that internal competition among employees encourage the latter to serve customers more efficiently so as to achieve higher targets. This ultimately leads to higher level of customer satisfaction and revenue generation within companies. Hartnell et al.(2016) contradicts this opinion and point out that uncontrolled competition among employees to targets only lead to conflicts among them. The employees in the pursuit of attracting new customers merely to achieve business targets assigned to them often fail to after sales and follow up services to existing customers. The outcome of this irresponsible customer management only leads to losing to customers and fall of revenue in the long run. The case study of Trading.com provides a perfect example in this regard. The management of Trading.com assigned unrealistic business targets on consultants which created stress on the latter. Further, the managers provided no support to the consultants in achievement of targets or the employees. The management did not take any initiative to train the consultants to manage this intense stress which is evident from the case study. The consultants without no intervention from either the apex management or the managers, indulged in cut throat competition of acquiring investors. They, in fact did not provide the existing investors with follow-up service or advice services. Thus, it can be pointed this hostile internal competition among employees only led to the firm losing its investors. This, it can be inferred uncontrolled competition among employees (consultants in this case) in organisation would prove detrimental to their businesses on the long run (Samnani and Singh 2014)
iii) Inexperience of key employees
Business organisations are under perpetual pressure to manage their vast body of information and in fact align it with their business growth plans. The following section would stress on the risk which business organisations due to failure to exercise sufficient control over their respective knowledge capital.
Business organisations have to manage their financial transactions stringently to ensure their profitability to their respective business processes. Li et al.(2016) in this respect that business organisations today indulge such huge volume of transactions right from making payments to creditors, receiving payments from debtors to paying salaries to employees that it has become very important to keep timely record of all these transactions. This fact is even more applicable in case of Trading.com since the company operates in the stock market. Arthur (2018) mentions that the returns in stock markets are subjected to several external factors like financial laws and economic conditions. Adam, Marcet and Nicolini (2016) further enriches this discussion by mentioning that the stock market is highly volatile and subject to both bearish and bullish trends. However, the high returns which stock market gives, which is far more compared to the secured investments like money market instruments, attracts immense number of investors. Chaibi, Alioui and Xiao (2015) further point out that the stock market is subject to financial transactions worth billions. Thus, in this respect it can be pointed out that the failure of Trading.com consultants to provide the investors timely advice led to losing its investors to other firms. This it can be inferred that failure to provide timely services in complex and high velocity bundled with poor information management would lead to losing of customers and business loss worth millions.
The apex management should daignose the gaps within the organisations like extreme hostile professional relationship among consultants or employees to achieve targets. The managers should take appropriate steps to control and diagnose the issues to prevent future recurrence. As far as the management of Trading.com is concerned, the management did not take any step to control and minimise the internal hostilities among employees. This ultimately led to poor investors service and business losses.
The expansion of business has necessitated management of business organisations to empower their employees holding managerial positions take decisions and decentralise parts of the decision making operations. This results in more dynamic business decision taking which boosts the performances of the organisations. However, as far as Trading.com is concerned, the apex management did not take any initiative to empower the managers to take business decisions. This led to efficient client management since the managers did not take any step to mentor or manage the poor customer management processes the consultants followed. Thus, low degree of decentralisation poor customer services and business loss.
Pressure points due to culture
Conclusion:
It can be concluded the development of a strong internal employee policies and taking appropriate steps to develop a healthy internal organisations is empirical to the business generations in business organisations. The apex management of Trading.com should initiate steps to bring about changes to strengthen its organisational culture.
References:
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