Thinking hard about soft issues

2007

They were viewed until recently as the "soft" side of management, but issues such as corporate culture, environmental protection and knowledge management have now moved to the forefront of executive thinking.

A new survey of more than 1,200 international executives by management consulting firm Bain & Company has found that nine out of 10 believe that corporate culture is as important as strategy for business success.

The environment has also moved up the corporate agenda, with seven out of 10 of those surveyed saying that environmentally-friendly products and practices were an important part of their mission.

While this environmental focus is something shared globally, it is even more important to executives in emerging market countries (77 per cent) than to those in established market countries (59 per cent).

"Executives are actively addressing higher order needs, changing the rules and the tools of management," said Darrell Rigby, senior Bain & Company partner and author of the Management Tools & Trends study.

"Organizational culture and so-called softer issues are now top of mind. Executives are clearly looking beyond cost-cutting for success."

Underlining this shift in emphasis, the study also highlights a sharp decline in popularity of outsourcing and offshoring as business tools.

When compared to results from the previous report in 2005, outsourcing dropped from third to seventh place in usage, while offshoring plummeted from seventh to 16th place in satisfaction.

Offshoring also now has the sixth highest "defection rate" in terms of the relative occurrence of companies who have stopped using it as a management tool the survey revealed.

But this in no way suggests any slowdown in the broader forces of globalization. Some four out of 10 of the executives surveyed said that cross-border acquisitions would be critical to them achieving growth objectives in the next five years and more than half (53 per cent) said that working with China and India would be vital to success. And nearly two-thirds said that innovation could be boosted dramatically by collaborating with "outsiders, even competitors."

But Chinese executives themselves have major reservations about their prospects in the near future, with almost half (45 per cent) bracing themselves for an economic slowdown compared to 27 per cent in North America, 18 per cent in other Asia-Pacific countries, 15 per cent in Europe and 10 per cent in Latin America.

"In evaluating the Management Tools & Trends 2007 survey, we are keenly aware that management attitudes often shift faster than results do," added Paul Rogers, a London-based Bain partner and head of the firm's global organization practice.

"While corporate culture, for example, is receiving considerably more management attention than in previous years, Bain research shows that fewer than 10 per cent of companies currently succeed at building high-performance cultures."