How the economic crisis affects the companies management.
David, Oana ; Osiceanu, Sanda ; David, Mihaela Florentina 等
Abstract: The current economic crisis has had consequences for all
sectors of the economy and has influenced national economies at a global
level. Therefore, the companies were obliged to adjust to these new
conditions in order to keep themselves on the market. The paper presents
how the activity of the managers and the entrepreneurs has changed
during the crisis and how they are trying to survive on the market. The
size of the companies, the ability and experience of these leaders are
important factors with decisive roles both in this process of survival
as well as in deriving the necessary revenues that will allow them to
overcome this difficult period.
Key words: manager, crisis, entrepreneur, economy, continuing
education, human resources
1. INTRODUCTION
In the nowadays context of the global economic development, the
human resources represent the essential element in the competition, both
nationally and internationally. Statistics show that the European
countries have a particular interest in the continuous education of the
human resources, mainly because of the specific discrepancies among
these resources in the European Union member states. Until now, the
investments made into education and human resources have proved to be
the most efficient methods of the long run development in a society.
The lifelong learning must help with solving some of the issues
that the contemporary society needs to deal with. As a result, the
education systems have to function in dependence with the needs of the
society, while having a certain stability and continuity that will
provide long-term efficiency.
'There are no crisis managers, just good managers and weak
managers'--is one of the current cliches regarding human resources.
Prior to that, the difference was represented by the level of the profit
being derived and now, the difference is from profit to loss. This is
the reason why the managers who are able to constantly obtain profit may
have the luxury of getting a higher income. During this time of crisis,
some companies have tried to adopt an appropriate management to match
their present situation, but not all of them have succeeded it. The ones
that failed were ousted from the market while the rest should learn from
their lessons.
2. PAPER DATA
The present economic crisis originates in the middle of the
90's, in the United States of America. It did extend worldwide in
the year of 2008, with harmful macro-economic and social consequences.
The starting point was represented by the management problem of the
long-term capital in the USA, followed by the drastic decrease of the
interest rate and the attempt of the Federal Reserve System of USA to
save the financially challenged institutions, climaxing with the
lowering of the federal funds rate at the end of 2008. The responses of
Europe towards the crisis were heard rather late and they seemed not to
be coordinated at all times. At first, the danger of the financial
crisis has been sugarcoated by most decisional factors in the European
countries. The starting of the financial crisis in Europe has revealed
the large number of weak points of the European financial institutions,
which are not at all different, but quite similar to their counterparts
in the USA. The collapse of a bank or of an investments fund will likely
trigger a huge chain reaction--if we remember the experience at the end
of 2008, when Lehman Brothers went bankrupt (Dabrowski, 2010).
The economic crisis has also brought about a series of changes on
the labor market. The importance of training the human resources for
this emergent market is supported by the necessity to react to quick
changes, to require new skills. The employers seem to favor the
graduates with a general training (foreign languages, computers, general
management), as they want to instruct the new employees at a local
level, in dependence with the needs that are specific to the employment
place. In a market economy that is in a constant change and renewal, the
workforce must be prepared to be flexible, since the total or partial
modifications of the employment places take place quite often. A large
part of the economy adjusts itself to the crisis and this process
involves, theoretically, massive professional retraining. On a practical
level, it means that people are supposed to adapt to areas that are new
to them, which they do not have a very good idea about (Marinas, 2010).
During time of crisis, many companies are making attempts to lower
their expenses to a minimum, but at the same time they are doing their
best to stay on the market. A substantial number of them reached the
conclusion that a smaller number of employees will do the trick for
them. However, this solution is not a feasible one, and proves the
existence of a critical management. Overloading the existing workers
with further job tasks will surely bring on more stress and quick
exhaustion--in a free translation, it means a lower productivity of the
people at their employment place, on both medium- and long-term.
The crisis periods are the one providing the opportunity to any
company to prove that the management really works and knows what
measures to adopt in order to get across this stage, with minimum
losses. These measures will allow the motivation of the employees, even
though they are left without certain benefits. This window of time
brings high expenses for most of the companies, from the newly opened,
on a minimum share capital, to the large multinational companies, older
on the market. Each of such companies has a surging interest in savings,
which is the costs planning and optimization.
A string of countries have taken measures to lower the wage-related
expenses, such as: reduction of wages, unpaid leaves, layoffs. These
measures have also negative effects, i.e. the smaller number of
employees will affect the company's productivity, lowering the
wages will lead to the employee's dissatisfaction and, implicitly,
to their lack of efficiency (Manole, 2006). The outcome of these
remuneration lowering during the time of crisis was a drastically
reduction of consumption, as people were oriented more towards savings
by giving up, postponing the acquisition of luxury products and services
or any products and services that did not strictly refer to a decent
existence. In this context, we could observe behaviors that are
completely different among various companies. These dissimilarities may
derive from the history of company, the patrimony and their economic
status, as well as because of the crisis effects.
The companies with a stable management (no changes for the last 8
years) are characterized by a low stress perception and a greater
satisfaction of the employees at their work place. (Iatagan et al.,
2010). People working here are oriented towards strategies that involve
social support and solving problems, focusing to their relations with
other people.
People working in companies where management is changing (a change
of the company's administration methods during the last 3 years)
perceive stress at a higher level and have less satisfaction at their
employment place, focusing more on challenging strategies. The managers
in the stable companies are more capable in their attempt to buffer the
crisis effects, to lower the stress perception of their employees and to
maintain a higher satisfaction level of them via promoting certain
strategies that involves common values and objectives.
The companies found in a changing process are more vulnerable to
crisis and experiment challenge-based strategies, which involves higher
energy consumption and a bigger creative effort during the
decision-taking process. For these companies, a need for consolidating
the feeling of belonging and trust of the people working there is
required (Togni et al., 2010). The managers will sense a bigger pressure
of the company's internal environment, as they are more
concentrated on the others, on the social support that they may provide.
They are rather interested on the short-term objectives.
As for the activity of the entrepreneurs, the authorities have to
make their life easier, by the measures they take during crisis time.
For example, some countries have helped the private sector by bringing
forth better conditions in terms of the company setting-up, exempt from
paying taxes during their first years, tax relief, hence an
encouragement for the consumption.
Entrepreneurship involves the implementation of certain
groundbreaking ideas, triggering financial losses. This is why the
entrepreneur is a person who will be willing to take challenges, to take
risks, who brings pioneering ideas and puts them into practice, no
matter how big the obstacles are in his way. The young entrepreneurs
should concentrate upon the fields that require a quite small capital to
start, i.e. services, as it is more affordable. Similarly, they should
have better prices than the traditional suppliers, ,low cost' type.
It is desirable that a young entrepreneur, without significant financial
resources, go for an activity in the services area, firstly based on his
work capital and his team's--these being the businesses where the
financial resources are not among the mandatory prerequisites.
At present, besides the financial aid granted by the government via
adopted anti-crisis measures, entrepreneurs should do the following to
focus on the crisis management; to know themselves very well and learn
something every day; to look forward, foreseeing the events; to have a
good training in terms of human resources and a project management.
The best entrepreneurs are the ones who make it through a crisis
time. There are big chances that we will have a new generation of better
entrepreneurs after this period--not only because there would be new
entrepreneurs in full crisis, but whoever comes out of this trial will
be stronger and more valuable (http://www.manager.ro).
The crisis-type entrepreneur is very open to changes, flexible, and
not that much interested to an immediate cashing, as they are ready to
risk. During crisis, it is easier for entrepreneurs to build a good work
team, as the number of skilled candidates, available on the labor
market, is higher, due to the economic crisis and to their low financial
demands. Another advantage for the crisis entrepreneur is that it gets
easier to motivate the valuable people.
The analysis of the differences between entrepreneurs and managers
shows a high level of complementarity among the professional profiles.
During crisis, entrepreneurs feel a higher stress as for the employment
places and their responsibilities related to the company survival and
development. The economic results are not essential objectives for them,
since their strategies are oriented on solving the problems and having a
positive attitude towards life.
The feeling of being challenged while facing the crisis is a factor
that motivates the entrepreneur's behavior, which presupposes
optimism for the future, as they are trying to understand the real
issues that they encounter on a daily basis. Generally speaking, the
crisis has raised the awareness level among entrepreneurs and managers.
3. CONCLUSION
The crisis time has had the purpose to help with the sorting of the
companies in the business environment. The more agile companies, the
ones that had the ability to adjust themselves, have succeeded to come
out unharmed; besides, some of them had a better market share, thanks to
the smaller number of competitors. The difference between the ones that
stayed and the ones that were out was made by the professionalism level
of the management.
The stable companies have a greater ability to accommodate to the
crisis; they feel less its effects, and, for the employment place,
people are more confident and have the skill to participate in meeting
certain objectives. The entrepreneurial role is defined by a positive
attitude, while the function of the managers is of a relational
mediation. Instead, the companies pending changes have assumed
individualist strategies and have not joined the entire group, because
challenge and creativity are the main elements of the strategies being
adopted.
In all the companies, crisis has generated an escalation of
relations between entrepreneurs and managers, which triggered the desire
and need to re-think the relational dynamics. This thing may occur only
by the strengthening of the stable companies, as well by building a
feeling of belonging and trust in the companies going through changes,
which are greatly affected by crisis.
The financial crisis is just a test for the entrepreneurs, and time
passing will bring new generations of them, better than the previous
ones. As said earlier, the new generation is very likely to be much
better, as going through crisis make them more enduring and steadier.
A better monitoring of the company's activity, lowering the
costs and preparation for supporting the future development are and will
be the top objectives for the company management, with the explicit
purpose of beating the crisis.
4. REFERENCES
Togni, M.; Cubico, S.; Favretto, G. (2010). Owners and managers in
an economic crisis: how to exploit the differences, Procedia--Social and
Behavioral Sciences, no.5, pp.1312-1316
Iatagan, M.; Dinu, C.; Stoica, A.M. (2010). Continuous training of
human resources--a solution to crisis going out, Procedia--Social and
Behavioral Sciences, no.2, pp.5139-5146
Dabrowski, M. (2010). The global financial crisis: Lessons for
European integration, Economic Systems, no.34, pp.38-54
Manole, C. (2006). Human resource management in public
administration, ASE Publishing
Marinas, C.V. (2010). Comparative human resource management,
Economic Publishing House
*** Available from: http://www.manager.ro, Accessed: 2011-02-16
