Obstacles To Adopting A Proactive Approach

Traditional management approaches and corporate cultures can present substantial obstacles to finding and implementing changes to existing methods. An emphasis on short-term financial indicators to the detriment of more fundamental measures of operational excellence, a culture of blame, and a rigid segmentation along functional or hierarchical lines can easily obscure opportunities to advance corporate performance.

Short-term financial indicators by themselves are inadequate to provide insight into the opportunities for improving firm operations, and a focus on these indicators to the exclusion of other performance measures is one possible reason that the potential economic benefits of some environmentally related process changes went unrecognized for years and in some cases decades. Yet the meaningful utilization of other performance measures requires an understanding by top management of the importance of operational improvement to the long-term financial stability and competitiveness of the firm.

A focus on blame, rather than understanding how and why problems arise, precludes discovering inherent flaws in procedures. Firms need to determine, regardless of individual culpability, what in the management system allows problems to occur. Root causes are a matter of system characteristics that allow problems to develop and individuals to make errors. Evaluation that assigns an individual responsibility for a problem may provide a sense of having solved the problem while, in fact, the root cause remains undetermined and the flawed system unchanged.

A lack of shared responsibility and cooperation resulting from organizational barriers between levels and stages of firm activities stands in the way of improving operations. Process success from the standpoint of overall system effectiveness may be quite low even with superlative performance on the basis of individual departmental criteria, if those criteria fail to reflect overall system success. For example, implementing solutions to problems that are uncovered requires flexibility in the use of operational funds. If financial management systems place excessive restrictions on the application (or redirection) of funding, the motivation to implement improvements may falter. This may be a problem in any organization, but it is particularly problematic in government organizations. Environmental considerations are more effectively dealt with when integrated into every activity of the firm. A functionally restricted approach leaves environmental improvement as an activity apart from normal operations and gives no incentive for others to take responsibility or initiative in finding opportunities to eliminate problems before they begin.

Overcoming these cultural barriers depends on the attitudes and commitment demonstrated by top management within a firm. Efforts by others in the firm will not be sustained if cor-

porate actions appear to contradict, downplay, or otherwise fail to support the task. The leadership needed to overcome these obstacles requires genuine commitment and vision by management in order to guide a rethinking of firm practices at the most fundamental levels.

Financial End Game

Financial End Game

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