Practical Knowledge Organisational Development

The overstretched organisation: symptoms, causes and recommendations for action

Social, political, ecological and economic conditions are pushing many companies to their limits and beyond. Pandemics, war, disappearing markets, supply bottlenecks, increased energy costs, digitalisation, a shortage of skilled workers... These are all challenges that companies have to overcome on a daily basis. However, the way companies approach the solution to these challenges often leads to the organisation being overwhelmed. Absenteeism, internal resignations and increased staff turnover are noticeable symptoms of this development.

Chess King stands and all the pieces lie - The overstretched organisation - netzwerk managementberatung | coaching
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Management Summary

The volatile conditions in the markets and society are overtaxing many companies and their employees. This is confirmed by the Gallup Engagement Index for 2023. This excessive demand is not healthy in the long term and leads to damage to a company's competitiveness. As a manager, you can interrupt the spiral of excessive demands with five key measures.

  1. Definition of a strategy that does not take growth for granted,
  2. Integration of social responsibility into the purpose of the company
  3. Planning additional resources for transformation processes
  4. Alignment of objectives and strategy with the resources available in the company,
  5. Building a culture of trust in your organisation.

Symptoms of an overstretched organisation

How can you tell if your organisation is overstretched? We list clear symptoms below:

  • Rising sickness rate and fluctuation rate
  • The majority of employees spend more than 4 hours a day in meetings
  • Quality decreases, error rate increases or is constantly high, complaints increase
  • Targets are not achieved or only with a long delay
  • Direct communication, also across teams and departments, is decreasing
  • E-mail communication has a significantly high share
  • The culture of finger pointing is growing
  • Changes are not supported or even actively undermined
  • New ideas or suggestions for improvement decrease or are vanishingly small
  • There is a gap between formal strategic orientation and operational doing.

Causes of excessive demands

We frequently observe the following causes:

  • Companies are sticking to their growth strategy despite scarce resources, such as supply bottlenecks for raw materials, a lack of skilled labour and managers and collapsing markets.
  • Achieving the target requires an unreasonably high level of additional effort.
  • Additional workload due to new legal requirements, such as the Supply Chain Sustainability Act and sustainability reporting are very bureaucratic and have to be dealt with in addition to day-to-day business
  • Lack of or insufficient digitalisation of central processes and workflows hinders productive work
  • Falling qualification levels due to lack of skilled labour weaken productivity
  • For fear of not being able to meet the increased demands, (honest) communication decreases. Information and opinions are concealed, mistakes covered up, ideas withheld.
  • Many managers are overwhelmed by leading in a crisis and restrict their teams' room for manoeuvre or sit out decisions. This lack of confidence in their own competence leads to a decline in team and organisational trust.
  • The internal distance to the company increases as employees do not see that the management neither recognises the changed economic, social and climatic conditions in the form of adapted goals nor aligns the corporate strategy accordingly. Trust in the established management is dwindling. The result is internal resignations.
  • Low level of visionary thinking in top management
  • Lack of confidence in dealing with their own excessive demands
  • Lack of awareness of the effort involved in transformations
  • A budget allocation that cements the status quo rather than enabling ground-breaking change
  • Lack of acceptance of declining resources due to illness, staff turnover and unfilled positions

How can you break through the excessive demands and help your organisation to recover?

The reasons for excessive demands already give an indication of starting points to break the negative spiral. We recommend the following actions:

1. recognise that growth cannot be taken for granted

Many management remuneration systems are geared towards growth. Nevertheless, it is time for management boards, supervisory boards and shareholders to change their thinking. Growth in a world of limited resources is not "God-given". Growth can be a result if a company knows how to solve specific problems of customers or society intelligently.

Acknowledging this and also stating it out loud in the company is the first step towards changing something.

Sustainable strategy development in medium-sized companies

2. expand the purpose of the company to include the social component

From my point of view, it is an absolute must for companies to expand their corporate responsibility to include the societal contribution and to incorporate this centrally in their thinking and actions. The guiding questions are:

  • What contribution do we want to make to society?
  • What social problems do we want to reduce or solve through our actions?
  • How do we have to position ourselves as a company today in order to pass on a healthy organisation to the next generation?

3. plan resources for transformation processes

In our experience, all companies undergoing major change and transformation processes should plan 30 - 40 % of their capacities, including those of the management, for this in order to lead the change to success in a structured manner and within a reasonable period of time.

4. align goals and strategy with existing resources

What can we realistically achieve with the existing capacities of our employees and by when? This coordination must be an honest dialogue. And it is not enough just to look at the existing FTEs; we need to consider the range of competences. It makes no difference to the number of FTEs if an experienced colleague leaves the company and is succeeded by a university graduate. It does make a difference to the expertise and productivity available in the company.

This also means that personnel controlling or competence controlling must be rethought.

5. build a culture of trust

The first three areas of action actively contribute to the creation of a culture of trust within the company, as employees and managers experience that they and the changes in the business environment are taken seriously. Nevertheless, I recommend actively investing time in building trust in the management circle, between hierarchical levels and in the teams.

Change needs trust

Team development in management teams

Concrete measures that promote trust-building

Below is a list of various measures, small and large, that promote trust-building in companies. Top management and leaders can make a big impact by leading by example:

  • Be honestly interested in employees and colleagues
  • Maintain confidentiality
  • Valuing diversity and promoting cooperation
  • Praise sincerely
  • Listen attentively
  • Communicate openly and honestly
  • Give honest feedback on a regular basis
  • Ask for feedback regularly and accept it without judgement
  • Address irritations and conflicts actively and promptly
  • Openly admit your own mistakes and make lessons learnt transparent
  • Dealing constructively with the mistakes of others
  • Listen to the ideas of others and take them seriously
  • Accept a "no"
  • Recognise successes

Companies that implement the measures outlined above initiate the recovery of the organisation. Of course, there are other ways to reduce the company's susceptibility to excessive demands. These include

  • Agree on appropriate implementation times for measures,
  • Employ staff and managers according to their strengths,
  • Offer an attractive specialist career in order to avoid that specialists have to take up the leadership career even if they are not suited for it,
  • Schedule time for continuous professional development,
  • Actively involve staff and managers in change.

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