Downsizing Dangers
DOWNSIZING DANGERS -
Think About Those Left Behind
Rupert Murdoch, chairman of News Corp, recently told the
World Economic Forum in Switzerland there is no hiding from the
current global economic crisis. He stressed the need for
quick and "drastic action" to turn the tide.
The list of businesses - locals to major multinationals - being
forced to adopt such extreme defensive tactics to combat this
ever-worsening financial catastrophe grows daily.
In economic downturns, many otherwise conservatives shoot from
the hip. Spending is savaged. Operating costs slashed.
Staff pruned to the bone. All done with little or no
consideration for the disastrous consequences these measures may
have on a company's long-term strategic planning and future
prosperity.
Losing experienced sales and marketing employees who have strong
relationships with clients ranks high on the list of 'disasters in
the making'. So, too, does an enforced exodus of trained and
experienced staff in areas such as finance, production and those
with specialist computer or IT skills.
"Will employees with comparable skills and abilities be
readily available when the business climate improves again, as
it most certainly will? I wonder," says Steve McGrath,
Jigsaw's founder and MD;
Usually forgotten are the survivors of a downsized
operation. Those remaining employees left with feelings of
guilt … fear … depression … anger; emotions brought on by losing
workmates and having to take up the slack. More often than
not they are forced to learn new tasks. Even take on extra duties
for the same or less money.
As history would have it, more companies suffer - rather than
prosper - from downsizing.
Why is this so? Simply because more business managers
fail to concentrate on the big picture. They see the need for
cutbacks in outgoings and finance. Yet pay greater attention to the
people they let go than the ones they keep.
For instance, they provide retrenched workers with services such
as outplacement counselling, resume writing assistance and other
sources for potential job leads. Some organisations even offer
early retirement incentives; give severance packages. But,
where's the generosity for those who remain behind to do the
work?
The blow of staying with a company that has downsized needs to
be softened, too. Employees often feel threatened their own jobs
may be in jeopardy. They may have a growing mistrust of the
company. They invariably have little understanding of what
management is doing. Or what their role will be in the
company's future. Managers must pay attention to the
survivors, too.
The simple truth is that, unless an organisation was designed
expressly for the purpose, it is not in business to provide
employment. Jobs are the by-product of successful
organisational endeavours, not their intended output.
The biggest danger in all this, however, is losing sight of a
long-term corporate strategy. It's important to remember that, no
matter what state the economy is in, there are always windows of
opportunity for those who constantly remind themselves what their
core business is all about.
This is particularly true in economic down phases which often
open up fresh opportunities because nervous competitors spend their
time and energy look inward. They become defensive.
Often so traumatised they fail to act positively; concentrating
instead on cost cutting and freezing investment. These are
ideal times to move ahead of such competition.
Ask yourself, what is the unique value you deliver to your
market? Perhaps it's a particular business or technology
expertise? Maybe it's fast delivery, personal service, inexpensive
pricing or a combination of strengths. Whatever your value offering
is, find it. Stick to it.
Above all, don't be like the proverbial hunter who goes after
two rabbits at the same time and ends up with none.
Concentrate entirely on your core strengths regardless of the
economy. This way you'll stand a much greater chance of
succeeding.
Instead of halting growth and focusing inwardly, find new ways
to streamline your business by collaborating with your customers
and partners. This may involve investing in new technology which,
if it supports your strategy and streamlines operating procedures,
you will usually find your return on investment can be fast and
favourable.
For example, ever-increasing numbers of companies are using MS
Dynamics NAV and SunSystems Accounting to help smooth the
integration and flow of core business information such as
production, accounting, distribution, supply chain, human
resources.
"We know from long experience, these applications are lowering
the cost of doing business. Perhaps, even helping save a few jobs",
says Steve
Finally, in these financially perilous times, perhaps a lesson
can be learned from a company in the UK during World War
11. In those dark days margarine was strictly rationed
and could not be labelled or branded. Despite this, STORK,
continued to advertise and plaster its name on billboards all over
the country for the entire duration … plus a couple of years
afterwards. When branded margarine hit the shelves again,
guess which was the biggest seller?
We're now in a different kind of war. Let's hope it's a
much shorter one. Above all, keep fighting.