The Vargas Group

It’s a challenging economic environment – ok – I get it.

What I don’t understand is how so many companies adopt a “one-size-fits-all” approach to cost management and expense reduction. The common actions seem to include across-the-board-cuts whether it makes sense for their type of business or not. When companies fail to plan carefully and deal ethically, they can seriously damage their reputations in the business and employee community. “This too shall pass” – how we manage today has everything to do with how well we recover when the time comes. If I could be so bold as to make some suggestions:

1. Look at cost management first. Where could you streamline, consolidate and eliminate in terms of operating costs? One company I worked with was able to eliminate more than $100k in software maintenance and licensing costs since they weren’t even using the software any longer! Another realized they had two applications that basically did the same thing and settled on one of them, again eliminating those costly annual support fees.

2. Could you change your method of operations? By considering alternative work practices, one company closed one of their locations, implemented a telecommuting strategy for those job functions where it made sense and redeployed the employees from the closed office to the home office.

3. Take a close look at some of your projects. Do you have projects that go on and on and on with no end in sight? This is common with internal projects – often they have outlived the business necessity and continue because no one remembers why they were doing it. Re-evaluate and redeploy your valuable resources.

4. Finally, once your expenditures are as lean as they can get, consider workforce reduction. Since this is often the FIRST place companies cut, I purposely leave it for last. Downsizing requires careful planning and an eye to the future – you do not want to cut the wrong people, in the wrong areas, at the wrong time. This is where alignment is more important than ever. Consider this:

*Which job functions have a direct impact on your ability to serve your customers and deliver product? If you are a manufacturer, for example, you probably don’t want to eliminate production staff.

*Who are your poorest performers? If you do performance reviews you should have the data that will tell you who should be the first to go. (If you aren’t doing performance reviews, we’ll talk about THAT at another time!)

*Do you have well documented process flows that indicate the inter-dependencies among departments? Example – one company I know of eliminated a Database Engineer in their IT department and a finance associate in the accounting department in early April. Come July, the sales division started screaming for their pipeline reports. Turns out the Database guy extracted the data and staged it on a server somewhere and the finance associate would retrieve the data and turn it into reports for the Sales team. Who would have known – until they were both gone!

When downsizing is inevitable, apply ethical, fair and consistent methods. One well-known company targeted those closest to being fully vested in their retirement plan – certainly not ethical or fair, and likely illegal. Contrast it with another company that based the decisions on job functions and performance and provided a small severance and outplacement services. Which one will fare better in terms of reputational risk?

In times of uncertainty and volatility, the impulse to react is hard to resist. Organizations that apply a strategic and cautious approach with an eye towards future operations will emerge stronger, leaner and more effective than ever!

Personally, I get tired of superstars. Maybe it’s because I’ve never been one and I’m a little jealous. Or maybe because their phenomenal success seems so unattainable. I choose to believe it’s because of what I’ve learned as an experienced manager and an organizational coach – they tend to be a little high maintenance. They start believing their own press and pretty soon they want more money, a better office, special perks – and after all that, shazam! They get a better offer and they’re outta there!

I really like team players. I admire the talented individual who recognizes the power of the collective we – the top performer who applies their expertise and skill to helping the company, the group, the project succeed. I especially admire those who have achieved a senior level in the organization and recognize they couldn’t have done it alone and maintain their sense of balance and humility.

When my sons played youth basketball, they had a coach that stressed assists over points. Following every game, he would acknowledge the points that were scored, but he would spend more time praising those who assisted in making the points. The message was clear – you may have put the ball through the hoop, but two or three other guys were responsible for getting the ball to you. Every step was as important as the previous one. Even Michael Jordan had to learn this lesson when University of North Carolina men’s basketball coach Dean Smith told him, “Michael, if you can’t pass, you can’t play!” Imagine how MJ’s career would have been hampered had he not learned the valuable lesson that, talented as he was, he was a member of a TEAM!

EXTREME managers learn how to extract the very best from each and every person on their team – from every person they lead. In doing so, they encourage top performance and stand a better chance of achieving success. Look at the people you have working for you – have you been focusing on your superstars to the exclusion of others? Are you inadvertently creating little prima donnas that suck the inititaive out of the rest of your folks? If so, go back to basics – encourage the assists!