UNIVERSITY OF GREENWICH. Is your management team ready to face the challenges of 21st Century business?

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1 Is your management team ready to face the challenges of 21st Century business?

2 Is your management team ready to face the challenges of 21st Century business? 82 % Recent reports indicate that business confidence in the UK reached an impressive 82% during the third quarter of The current business climate in the United Kingdom is a positive one. Despite the problems of other major countries within Europe, such as Germany, business owners in the UK are reported to be extremely confident about their immediate future. Many business analysts predicted that the continuing difficulties being experienced by countries in Europe would have a negative impact on businesses in the UK but this has not been the case. Recent reports indicate that business confidence in the UK reached an impressive 82% during the third quarter of This is only a fraction under the highest-ever recorded level and if you compare it to the net EuroZone figure of 35% it reveals that the UK really is leading the way in terms of both business and economic recovery. This shows that the country does not need to over-rely on trade with European nations; perhaps the emerging links between the UK and developing countries throughout the world will prove to be as successful as predicted. However, despite this positive outlook there are undoubtedly going to be some major challenges to be faced by businesses throughout the world. By understanding them and evaluating how to deal with them, business owners in the UK can continue to enjoy their recent successes. 2

3 An uncertain future? There are a number of challenges that business owners and their management teams will face over the coming months and years. Invariably, financial factors will top that list. With many countries throughout the world still feeling the effects of the credit crunch, businesses are always looking at ways to safeguard their own futures. Unfortunately this can lead to redundancies and other cost-cutting measures but despite the ongoing uncertainty it is still advisable to commit to a long term plan. By strengthening the business and having a clear strategy in place, you give yourself a better chance of overcoming future obstacles. The uncertain future of the economy is certainly a cause for concern but it should not prevent businesses from growing; albeit in perhaps a more balanced and prudent way. Recent reports suggest that one of the major challenges facing businesses is in relation to securing new custom. Again, this ties in with the uncertain future of the economy. Businesses are hesitant to commit to orders and purchases but thankfully business confidence in the UK is growing all the time. 15 % Indeed, only India reports higher levels of confidence and a recent report carried out in October 2014 suggests that fewer than 15% of UK businesses have concerns about future custom. If those figures are correct, this further emphasises the current levels of optimism being felt throughout the country. One of the key factors with regards to attracting and retaining custom concerns customer service. With more competition for business than ever before it is imperative that your management team and staff understand the importance of exceptional customer service. This will undoubtedly improve your chances of securing new business whilst at the same time keeping your current customers happy. India reports higher levels of confidence and a recent report carried out in October 2014 suggests that fewer than 15% of UK businesses have concerns about future custom. 3

4 Staff recruitment issues 154,000 Unemployment is at its lowest point for five years falling by 154,000 people in the three months to the end of August Perhaps one of the most overlooked challenges is in relation to staff recruitment. The Office for National Statistics (ONS) has shown that unemployment is at its lowest point for five years falling by 154,000 people in the three months to the end of August The problem for businesses is therefore unlikely to be filling vacancies within their company but rather retaining those which are already employed. Training employees can help to make them more productive within their roles but it also equips them with skills which can be taken elsewhere should they wish to move on. Maintaining high levels of workplace morale and ensuring employees are treated well is therefore a major challenge for 21st Century businesses. Money naturally plays an important part in retaining talented staff but so does job satisfaction. Consider working practices and the working environment of your business and look at ways to improve them in order to increase levels of job satisfaction and keep staff firmly where they are. Instigating minimum term contracts that lock employees in for a set amount of time can also prove useful. 4

5 Understanding new technology As technology continues to improve and evolve, the need for businesses to keep pace with it is vital. New technology is released all the time and businesses need to be aware of how it affects them and how it can be used to improve both their services and their overall efficiency. You should ensure that your management team is aware of this technology and understand the impact that it has not only on your own business but also on your customers and competitors. Cloud computing is one of the most recent additions to the technological arena with a big push being made to increase systems which facilitate collaborative and remote working between individual users. This clever computing concept reduces the need for expensive IT systems and the associated maintenance costs with systems simply downloaded on specific machines and devices and then used from various locations. The main emphasis is on creating an any time, any place, any device method of working that enables maximum flexibility within the workforce and big tech companies are getting in on the action. Cisco recently reaffirmed their policy that remote workers are a valued and critical part of its workforce ; claiming that 66% of students and young professionals place a higher value on flexible working conditions than they do on their salaries. Businesses are recognising the benefits of technology such as cloud computing quicker than ever before and in an ever-changing and increasingly globalised environment, taking steps to ensure your business does not get left behind is vital. Businesses are recognising the benefits of technology such as cloud computing quicker than ever before and in an ever-changing and increasingly globalised environment 5

6 Dealing with finances and competition As outlined above, the UK economy seems to be recovering well and this has led to more and more new business start-ups. Whilst this strengthens the economy further, it also provides extra competition for products and services. Your management team must be aware of new competitors entering the industry and develop a marketing strategy that will both secure new custom whilst retaining your current client base. The scale of the marketing campaign will depend upon how much finance is available. If you have implemented a marketing strategy in the past that has proven to be successful it may be a good idea to use it as a template for future strategies. Your management team should be aware that the business environment changes rapidly and amend previously used marketing strategies accordingly. Obviously, the scale of the marketing campaign will depend upon how much finance is available. Problems with the economy will always lead to problems for businesses, especially with regards to securing finance. Lenders are more hesitant to assign the funds required with stricter eligibility guidelines being enforced. With this in mind your businesses cash flow should be a prime concern. Ensure that you do not waste money on unnecessary expenses and develop a marketing strategy that is both prudent and realistic. 6

7 The impact of reported skills shortage on UK businesses Despite the improvements to the economy and the increasing levels of business confidence, there is still one area that threatens the future of businesses in the UK. The economic recovery could be at risk due to growing levels of skill shortages and a recent study by UKCES has revealed that the situation continues to worsen with almost 22% of job vacancies left unfilled last year due to a dearth of suitably qualified candidates. This figure has risen sharply over the past two year as shown by a similar study undertaken in 2012 which revealed that only 16% of vacancies were left unfilled. Many businesses are suggesting that one of the major reasons behind this surge is due to a lack of basic communication skills. Oral communication, literacy and numeracy skills were all considered to be key factors in unfilled vacancies. Whilst the number of vacancies is a sign that the UK is now recovering and indeed growing, the possibility of filling those vacancies seems to be diminishing. In order to meet the demands of your business and fulfil the expectations of your customers, it is vital that steps are taken to ensure you have both the quantity and quality of staff. Do not wait until you have an immediate vacancy. Look at your business plan, the age of current staff members and possible expansion options and consider your future staffing requirements. If there is a particular skills shortage that will have a negative impact on your business, why not consider implementing your own training process? In order to meet the demands of your business and fulfil the expectations of your customers, it is vital that steps are taken to ensure you have both the quantity and quality of staff. 7

8 How education can combat skills shortages Many industry experts suggest that the only way to combat this skills shortage is to give people access to top quality apprenticeships and other similar schemes. By increasing the availability of such schemes and providing incentives such as earning whilst learning young people will be better equipped to fill the increasing number of vacancies. In terms of ensuring that businesses have sufficient numbers of suitably qualified individuals to fulfil management positions, experts are increasingly commenting on the benefits of MBA courses. This undoubtedly starts at a young age. School leavers in particular should receive advice and guidance with regards to current and future skills shortages so that they can decide what training or education they require to fulfil these shortages. Important choices can be made at an early age and young people can choose whether to continue their education at college and then university or enrol onto a modern apprenticeship scheme. In terms of ensuring that businesses have sufficient numbers of suitably qualified individuals to fulfil management positions, experts are increasingly commenting on the benefits of MBA courses. An MBA (Master of Business Administration) is available at most universities throughout the UK and concentrates, as the name suggests, on business administration. The course itself is very demanding and particularly intensive but it has received plaudits throughout the country for developing young people and making them ready for the cut and thrust of the business world. Individuals that would like to combine work and study can choose from one of the many universities that offer part-time MBA courses. For business owners, this can be a great way to improve the skills of current staff members as employees can remain in their role at work whilst developing vital skills that will be a great help to your company in the future. 8

9 How the location of your business can affect the challenges faced The location of your business has a major impact on the scale of the challenges involved. Consider businesses that are based in cities such as London, Birmingham and Manchester. Major cities undoubtedly increase the number of potential customers but you should also be aware that there will be higher levels of competition. In addition to this, rental charges will be a lot higher than for premises in smaller towns and cities. If your business relies heavily on local trade then perhaps a larger city may be more suitable. Conversely, should your business involve manufacturing products that are delivered throughout the country, a smaller, centrally located location may be better. It is advisable to consider the pros and cons individually and come to a conclusion that is the most suitable for the success of your business. You may also find that there is a clear disparity between the salaries paid to individuals in identical jobs that are located in different regions. It is widely assumed that staff wages in the North of England are somewhat lower than those in the South and this is often determined by the cost of living in that area and other relative expenses. Whilst setting up operations in cheaper locations will save your business money, it may have a negative impact on the quality of your staff which is where remote working can once again play an important role. As Cisco highlighted by revealing that two-thirds of young professionals place more importance on flexible working than salaries, it is clear that the sort of opportunities you offer your staff will have a huge impact on the calibre of candidate you attract with location less of an issue when working remotely. By setting employees up with the necessary hardware and software including VOIP systems, accounts with Skype and cloud computing you can literally target any location you want to find the best staff. Maintaining high levels of worker morale can be achieved through work social events that all employees are invited to attend regardless of whether they re based in the office or not and you can also schedule regular meetings between office staff and remote staff to ensure good levels of communication and rapport. As well as overcoming the issue of skills shortages, remote working opportunities also help to satisfy the hunt for premium salaries. Prospective employees will not have to deduct potentially extortionate travel costs from their salaries to determine their actual wage and this means they may be willing to accept a lower offer than if they were required to travel into the office each and every day. A reduction in stress levels caused by removing the need to travel during peak times and avoid inevitable congestion can also play an important role making employees feel happier in their roles and therefore improving productivity. 9

10 Plan for the future Future business strategies and careful planning play a big part in the continued success of any company. Evaluating staff and identifying potential shortages will enable you to deal with these important issues efficiently and effectively. It is certainly advisable to look at possible staff training options and business related qualifications such as those provided by the popular MBA courses. Understanding the challenges that your management team will face in the coming years provides you with potential solutions. Taking action at an early stage gives you the time to improve the skills, knowledge and expertise of your management team. With business confidence increasing all the time and the UK enjoying something of an economic resurgence, businesses need to be prepared for rapid growth in the 21st Century. Sources:

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