You hear it almost everyday – a company laying off part of its workforce - to improve profitability or as the last resort to stay in business. Why does it reach that point? Why do leaders resort to this method? Why can’t companies reduce costs without getting rid employees? The answer is they can. But it can’t be in response to short-term thinking or a crisis. It must be hands-on approach. Cost cutting must become an on-going objective that is as important as any other Accounting or Finance effort.
It is so easy and shortsighted to cut employees regardless of what Management will tell you or what you read in magazines and newspapers. So-called leading experts from business colleges do studies and research on the best ways to remove people from the bottom line with little impact on the organization. They are full of crap and when they do instruct they fill the next generation of leaders and managers with the same crap. It has been going on for years, I am a product of that schooling and I’m just lucky I found the teachings of Dr. Deming to help set me straight in 1980.
I have personally been involved and had to make decisions as to how many and what employees should be let go. Each and every time I fought for other ways by providing examples of other companies, ideas and probable solutions other than cut people. The problem with my input was it took too much time according to other decision makers and the charge to get rid of heads was to be done soon, quickly and above all quietly. Do not let employees and the most feared of all “The Press” get wind of what was in store for the company. Again, a bunch of crap, “GUTLESS” is the optimum word for these type of managers and leaders.
It’s a new year so let’s move on …
I’m not going to go in to the traditional Cost of Poor Quality – see my post at http://qualityg.blogspot.com/2006/03/quality-tooltechnique-best-efforts.html
What I propose to do for 2008 is to form a cross-functional team that represents all departments under the “active” leadership of a decision-making Vice President.
The type of cost cutting will be Discretionary and Headcount related (not cutting employees but may involve different jobs, movement, reporting structure, etc…).
Spreadsheets should be developed that list items along with the following categories/columns:
Owner, Category, Idea, Q1 Q2 Q3 Q4, Probability of Achievement (%), Savings Per Month
EOY Savings, Description, Tracking Number, Department Manager, Department Rep Go /NoGo, Data Status (green, yellow, red), Org Dependency, Doability (yes/no).
The following are some of my examples and ideas that if looked at closely can save a company large amount of dollars and not lose efficiency or effectiveness of operations. Some may seem harsh but I’m betting the majority of employees (don’t say NO until you ask them) would rather keep their jobs with some signed assurances and agreements with the leaders of the company.
- Freeze all Salaries (until you no longer have to cut people)
- Renegotiate and cancel consultant agreements (trust me, you have the knowledge inside your company, look for it, use it, trust your people)
- Your employees will always make better company decisions than 99% of business consultants out there. Why – because they care and LISTEN!
- Reduce and Scale Down Company Picnics and Parties
- 2 Week - Month Vacation w/o Pay
- Giving up monthly Reimbursement Perks (i.e., phone cost)
- Use Internet as source for cheaper fares (car, plane, train) and hotels (cancel contract with travel agencies)
- Turn in all unnecessary pagers and cell phones
- Revisit who needs cell phones and update cell phone plans to best provider
- Reduce Travel Per Diem allowance unless dining with customers
- Discontinue company-paid annual dues for professional organizations.
- Give employees the option to work 37 1/2 hour workweeks, which allows a 20% reduction in salary. Work in combination with flexible work arrangements
- Discontinue funding for all Business Resource Groups (including registration for annual conventions, travel fees and annual gala balls
- Remove unused and outdated Telephones and Lines (computer, fax)
- Renegotiate supplier contracts to single-source suppliers
- Remove all copiers (and contracts) and use local printers
- Return all unused equipment to vendors and free up space
- Reengineer Work Stations to save on space (sell or lease free space)
- Carefully look at an effort to move towards virtual office to realize real estate cost savings
- Re-negotiate cost of leased space (if applicable)
- Cut out goofball training by consultants
- Prioritize work place upgrades (i.e., cafeteria, gyms, conference rooms)
- Change Sales Compensation Plan to pay at in-effect with additional incentive for Sales to sell high margin
- Revisit Procure staff guidelines / Processes / Contract. Too many mistakes occurring and nothing can be corrected and we company is paying for the consequences
- Cancel Coffee and Bottled Water Contracts
The above items are just the beginning … Cmon do something good in 2008, don’t punk out and take the easy management way. Please don't contribute to "The Demise of American Management."
So in 2008, "Stop complaining about poor performance of employees, and start worrying about the poor performance of management."
I have written about this subject a number of times over the past two years. It never gets the attention it needs or the news stories to supplement the ways to improve our educational system. Is it the only solution? Of course not but it is one probable solution to a broken down "Baggy Whip" of a system. Baggy Whip = Antiquated.