How to Make Companies Think Long-Term
How to Make Companies Think Long-Term
According To Helen Lee Schifter, in today’s myopic economic world, companies seem to take a short-term view of profits and losses. Vested interests are important for all members of society, but especially for those who depend on a company having a future beyond one focused only on the current quarter or year.
1. Remove obstacles
To start with, companies need to make sure that their strategies aren’t hindered by existing management. Research conducted by the Harvard Business Review found that many obstacles prevented senior managers from making decisions. These included having poor short-term performance in mind (bankers, stakeholders and media), too much focus on personal interests and being worried about getting fired if results aren’t good enough. The study also found that a high percentage of CEOs were afraid of making wrong decisions and avoided making important strategic decisions.
2. Ensure all parties are on the same page and that they understand the bigger picture.
It’s important for all managers to know where the company is heading and to share the same vision – it’s important to ensure individual objectives aren’t in conflict with company strategies and that they’re on board with long-term plans. The Harvard Business Review also found that around 60 percent of CEOs have a history of being made redundant, meaning they’d be happy to see their next job as a promotion rather than an opportunity for continuous development. These are the CEOs that have a high chance of making ill-advised decisions.
3. Praise long-term thinking as much as short-term thinking.
The study also found that CEOs who believed in long-term strategies and didn’t judge managers on short-term performance were more successful than those who placed their complete trust in specialists. It is because specialist companies can’t make big decisions or re-align themselves when necessary. After all, they focus on one particular industry. Being able to think in the long term means you can adapt to the changing needs of your company and its changing markets.
4. Rewards for long-term thinking.
To encourage long-term thinking, Helen Lee Schifter thinks that CEOs need to check that compensation, promotion, and bonuses are fair to those who think in the short term and those with wider visions. It’s also important not to underestimate the power of positive feedback; a few words can do wonders for a company, so leaders should go out of their way to praise those who show signs of long-term development.
5. Hiring personnel who fit your needs.
Letting ego get in the way can jeopardize any company’s progress. Organizations run on their people, so it is important to find the right person first and – more importantly – to make sure that that person sticks with the company rather than jumping ship to join a competitor. Companies must also include long-term employees in their corporate strategy and career planning.
In today’s myopic economic world, companies seem to take the short-term view more often than not. Vested interests are important for all members of society, but especially for those who depend on a company having a future beyond one focused only on the current quarter or year.
