How CEO's Overcome Internal Resistance To Execute Resource Allocation

Companies that actively and regularly reevaluate where resources are allocated they create more value and deliver returns to shareholders.”

The fundamental goal of resource reallocation is to embed agility in the organization so that it can move as opportunities shift. However, many CEOs face usually the internal resistance from business leaders seeking to protect their turf to resources bing embedded in ways that make them hard to free up.They would be defensive of the businesses they’ve built, claiming that shifting resources would result in negative cash flow and but the company at risk.

According to Yuval Atsmon from Mckinsey & Company, here are a few ways you can encourage a positive attitude within your team to overcome the fear ofchange managementand resistance.

1.Clearly communicate to your team that dynamic reallocation is a priorityand that decisions are final unless there is a material external change.

2.Create a common language around resource reallocationthat integrates it into the culture of “how we do things” and stresses its importance in realising growth aspirations.

3.Establish clear accountability between corporate-center and business-unit levels.and determine which resource decisions need whose approval, what gets monitored and reported, and what escalation mechanism will be used in case of delays.

4.Regularly review assumptions behind allocation decisions to make sure they still hold,both around new investment requests and previously allotted resources yet to be deployed. If managers are protesting decisions on resource allocation, is there a reason to update the assumptions?

5.Consider organisational changes to improve resource flexibility,such as creating shared resource pools or enabling talent to be more easily redeployed.

6.Embed dynamic resource reallocation into the planning process and management incentives.You want to make it necessary and beneficial for management to continuously seek ways to apply resources for the benefit of the overall company rather than their own fiefdoms.For example, ask every business cell to start next year’s budget with 10 percent less in operating expenses; the combined amount becomes a central investment pool for which the cells compete.

The Example of British Airways

Take the classic example of British Airways. During the 1970’s oil crisis, British Airways was suffering from significant financial losses and a reduction in customers. Lord King, the newly appointed chairman at the time noticed that resources were used poorly and the entire company was not operating efficiently.

King then decided to restructure the entire organisation in hopes of increasing profits. By reducing workforce numbers and cutting unprofitable air routes, he repaired the airline’s brand image by hiring a new marketing team. After ten years, profits grew to the highest in the industry.

Why did it work?Before announcing cut offs, King was transparent with the entire organisation about reasons for restructuring. Without this communication, the airline could have experienced severe employee backlash and additional negative press.

By using the above ways, the business can undergo resource reallocation processes easier, and a positive attitude can be fostered. Ultimately, businesses need to be agile in order to capture ever-growingbusiness opportunitiesas they transcend across industries.