Jigsaw Blog



Downsizing Dangers

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.