February 2009 Deep Insights

An economic downturn is an opportunity to revisit strategy, tactics and more importantly people and their skills to be competitive in the present and future environment.

Too often organizations begin to scale down their workforce with little or no analysis. Cutbacks are determined as a percent of the total financial goal 1) People from mature product lines are selected for layoff or early retirement 2) Sales and marketing people from scaling product lines are selected at random for layoff and 3) Administrative personnel by function for layoff. Next, budgeting processes trim training expenditures in the same crisis mentality, if not being used to fix the current emergency the dollars are cut from the budget to meet financial goals. Crisis is the mental mode of day to day activities. What has been accomplished? The workforce is reduced, expenses are trimmed, and the organization can rest its war against scale down efforts ---- or can it?

As the survivors begin to take inventory of skills and redistribute workloads they recognize they cannot do everything. Activity cuts will have to occur challenging others to do more or do without. The survivors also find a lack of skills to execute strategy and tactics and are without a budget to train those who are going to be held responsible. When skilled resources have been trimmed a best use of survivors’ strategy takes over and coaching by those who know the most is implemented; the inefficiencies begin.

Coaches, who have limited skills, and little time, attempt to teach those who do not have the talent and in many cases are not interested in learning new skills. Quality begins to be sacrificed, “get ‘er done” reigns, and revenue slips behind the forecast for budgeted expenses. Management is challenged to correct the revenue shortage and determines the best course of action is to permit part time and vendor personnel to be part of the solution. Those best fit for these positions are often the “terminated pool.” They are hired as consultants or part time people. All is well until the organization realizes they are paying more for these services now then when the people were full time employees.

The solution to this economic downturn crisis model is to visit strategy and tactics; determine the skills required for execution efficiencies, locate the people with those skills and act accordingly when determining scale down, training budgets and necessary hires. Then implement a “hiring and wage freeze” to insure productivity and employment cost control. The organization will be rewarded with increased efficiency, commitment and loyalty. Revenue will remain consistent with the available market, expense control will flow from budgets, and the organization will be positioned for the next growth cycle.