Any business movement will require certain resources to be spent. Although a company could use manpower as a resource for change, change will ultimately place a dent on the company’s finances. For that reason, business change also comes with a monetary sacrifice. A business leader could even base the feasibility of change on the actual cost on changing. Any type of change – whether for expansion or a change in business plan will cost the company considerable money. For that reason, every stage of the change process has to be carefully done to avoid unnecessary spending.
Cost and Return of Investment
When establishing change in a business, managers and leaders in the company should sit down and find out the actual cost. An estimated cost could be provided to the business leaders, but this practice is never recommended. Although estimated cost could provide a better than ballpark price, an itemized expected expenses during change should be presented to the leaders of the organization. This will not only prove if the change will be cost effective but will also prove that change is ready and just needs the approval of the managers.
It is essential for the managers to know the exact cost of change since this will be compared to the increase in profits when the company properly implements those changes. The ROI or Return of Investments should be highly considered by the business leaders and its managers.
The increase in profits could actually be measurable especially when there is an expected increase in financial earnings. On the other hand, not everything is based on money. Leaders and managers should also consider ease of operations as reason why the cost for change is worth it. A classic example is when the company’s operation expands to an area where most of its employees live. This change will not earn the company anything but it will boost the morale the employees and will save them on transportation costs.
Unfortunately, there are situations wherein the change is on finances itself. There are times wherein the company is not able to post considerable loss for a time period. This is highly possible today because almost every company is experiencing the painful effects of recession. Some would even go to the extent of closing down their company because continuing the operations will just increase company losses.
This could also happen to a company who are having trouble in their finances. Company leaders will usually have two options –either cut down cost through job losses or save everyone through negotiation. This could be decided when the employees and the leaders sit down together. This is a very crucial and highly disappointing situation that it could lower down the morale of the employees significantly. Some might even consider resignation as one of the ways of getting out of the messy financial situation the company would be.
As a leader, it would be for the best of the company to hear their side first before making any decisions. Although everyone is down because of the financial struggle, your employees could take comfort from the fact that the managers were able to hear out their employees.
Money and Performance
No matter how much a company pushes their employees through praise and ideal working conditions, none of these motivational tools could work as effectively as monetary compensation. When an employee is aware that certain rewards are available when reaching a certain mark, the employee could be vigorously working towards the realization of the expected productivity. When there are financial rewards, the possibility of improving productivity increases at the same time.
Refocusing on the task ahead after a significant business change could sometimes be difficult for the company. But this could be easily achieved when monetary compensation becomes part of the business plan. As already indicated, individuals will be working a little bit harder when they see financial rewards are coming. The leaders just have to make sure that they are true to their word or else it will just do more harm than damage.
During change, financial considerations always come into play. Business leaders should be able to harness their financial capability not only to improve the company but also to improve the employees’ performance through additional compensation.