Does the difficult economy have to mean greater unemployment levels? Or can more thoughtful management decisions turn this environment a good thing for organizations?
All across the country we're hearing the sound of budgets being cut. Headcounts are being reduced, expenses slashed. As bosses increasingly talk about the need to do more with less, they may be turning employees’ focus away from doing a good job toward fretting about their own employment outlook .
What's a leader to do in this climate? And how?
Before you tell either your head of finance, or your staff, how you plan to cut back on costs, consider these ideas and tactics. New thinking at your place could turn a bad environment into one that produces some solid, positive outcomes. But to implement them may take guts:1. Is it this only choice or the right choice? Generally speaking, nobody likes a situation where they have no choices in their actions. Telling people they have to leave an organization because, "there's no more room in our budgets. We can no longer afford to have the same number of employees as we did in better times,” is old-fashioned, top-down decision making that fails to capitalize on the collective brainpower. It’s weak, and most leaders can do better. And, by the way, it won’t make it any easier for you to tell people to pack up their cubicle or office.
Before you start telling, I suggest you try asking.
When people face difficult times, they can become very innovative. I've heard of creative enterprises where team members began job sharing, with each working less time so that nobody had to leave while the company dramatically reduced expenses. In other organizations, people began multitasking - often in new areas - so that they could keep on board until business came back. Innovative organizations will let people take part time jobs at other employers, so they could keep a level of income flow and the company could reduce payroll costs.
The point is - don't just presume that you've got to go the route of layoffs. And don’t think that those affected don't have any new ideas to keep the team together during this tough environment. Payroll and benefits is very often about a third of an established organization's ongoing expenses - it's time to get creative.2. I love my office; but do we really need all this overhead? Let's face it - renting real estate and offices is so twentieth century isn't it? Why keep all of your offices when the technology exists to allow many people to maintain their productivity while working from home or Starbucks?
Surveys are clear that many would prefer to work from home, at least a lot of the time. I'm not advocating the end of offices entirely; but it's probable that many organizations could reduce -by as much as half - their office and real estate costs and continue to operate successfully. Rent and associated fees are generally one of the largest "fixed costs" for an organization. Who says they're fixed?
As bonus benefits on this one, you can add:
- the fact that transportation costs are not likely to fall much over the long term. so your staff can save a some cash on travel.
- it's better for the environment when we reduce emissions from less office and car usage.3. "I know that half my marketing is very effective, but I don't know which half...". It's a hard reality, but most execs can't say with precision what their actual return on investment is for each and every marketing / promotional / advertising expense. In good times a company can get away with that; after all as long as you're making your growth plans - who cares, right? But when times demand greater acuity, if a program can't be justified, it should be blown up.
I can already hear my voicemail box stacking up with cranky comments and justification why "this should not apply." But in these times, every leader needs to start asking tougher questions. Everyone needs to be honest and drop the lingo that people in other parts of the company can’t comprehend. This expense line is usually one of the largest discretionary lines and it should be examined closely.
Many small businesses will come out of this economy stronger and more successful. They've never built the infrastructure and always had to make due with less. And that, I believe, is an approach that organizations of all size must learn from those entrepreneurs and self-employed leaders.
Consider this tight economy a wake-up call to learn how to be competitive again. The world is flat and getting flatter all the time. To compete, every organization and business needs to be mean and lean. This is a great time to learn how to be better; by doing the right thing.