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VietNamNews

Poor management causes business plans to fail

Update: March, 26/2012 - 09:52

HCM CITY — Dysfunctional business behaviours lead to strategy failure, including decisions taken while unaware of relevant risks, as well as self-interested behaviours, such as deliberate understatement of risks or overstatement of benefits to get approval for a proposal, according to a recent survey issued by the Association of Chartered Certified Accountants (ACCA).

Many of these behaviours involved dishonesty, while others were due to mere bias, the survey revealed. For the survey, more than 2,000 ACCA members across the world were asked about the frequency of 14 dysfunctional behaviours in their companies.

Up to 68 per cent of respondents cited underestimation of risks as one of the main reasons for failure of organisational strategies.

Overestimation of their ability to predict and control future events was selected by 59 per cent of the respondents. Decisions biased by personal interests were cited by 41 per cent of those involved in the survey.

At least 31 per cent said there was an inappropriate propensity to risk-taking, either too high or too low.

Four per cent said bad luck sometimes was involved, including events occurring despite careful planning, which led to failed organisational strategies.

When asked about the causes for strategic failure, non-executive directors were more likely to suggest personal bias, and less likely than others to point to poor judgement, according to the survey, which was released at a seminar in HCM City recently.

Asked why leaders undertake unethical behaviour, the respondents cited pressure as the top reason. They said the pressure could stem from unexpected financial difficulties or fear of the future for their organisations or their own jobs.

However, among senior non-executive directors, planned dishonesty or opportunistic abuse of power were seen as bigger problems.

Non-executive directors also responded differently from other respondents when asked about unethical forecasting practices and the behaviours that undermined decision-making in times of uncertainty.

A majority of board members said that overly optimistic forecasts were never made in their own organisations, but only 20 per cent of financial controllers or accountants believed that this never happened.

As for behaviours that can undermine decision-making, personal power battles or the skewing of predicted risks or rewards to favour a desired outcome were cited by both executive and non-executive board members as practices that could frequently occur. — VNS

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