Considering Redundancies To Curb Expenses? Four Measures To Action Before You Make The Cut
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I was asked recently why after 20 years in business strategy, I never worked in restructuring with any of the big global consultancy firms. My answer? Well, I’d sooner cut off my own arm.
In 2003, Aron Ralston was climbing in Blue John Canyon in Utah when his arm got caught between the rockface and a dislodged boulder. After 127 hours of being trapped, screaming, out of food and water, in tremendous pain, bleeding, passing in and out of consciousness, and hallucinating, Aron made the painful decision to cut his arm off to save the rest of his body. He used a dull multi-tool, a crude and inefficient device, to painfully sever his right arm, and free himself to find help.
People in an organization are like parts of a body. Information and money are like oxygen and blood that keeps the various systems working together in harmony. The finance, manufacturing, human resources, and sales departments all work together to keep the organization working well. Until one day, when something in the market happens that the management did not anticipate, like a dislodged boulder, and the body feels trapped.
All too often though, leaders run to a brand name consultancy for help, where well-meaning consultants inevitably pull out the dull and rusty mid-1980’s multi-tool of job cuts, and begin hacking away at the organization in an attempt to save its life. Here’s the thing though: this is not Blue John Canyon, and companies are very rarely truly stuck between a rock and a hard place. It’s more often than not a simple lack of imagination, combined with the short-term cash flow gains manufactured by a forced amputation of talent, that leads some consultancies to recommend redundancies to achieve budget savings targets.
They then write their hefty invoices, while patting themselves on the back for how much money they saved by cutting jobs, and it’s a bit like congratulating Aron Ralston on his rapid weight loss. A monumental adventure in missing the point. It’s crude and painful, and in high contrast to Aron’s bravery, it’s not courageous at all to cut people out of your community, just because they missed a few sales targets. Never mind the effect it has on the people that were cut off, what about the years of rehabilitation required for the parts of the body that remain behind? Do you think those left in the organization will trust their leadership after that? How long will it be before the remaining staff spend any less than 30% of their workday looking for a new job? How long until trust and transparency are recovered, until input seeking behaviors and quality decision-making are back up to peak operating levels? Years.
If you ever cut jobs for budgetary reasons, you will likely be measuring the long-term cost in missed opportunities and underperformance for years. And you will wonder why with such a “great round of job cuts,” you’re still not performing better in the market. It’s because your corporate body is injured and in rehab, and will remain there for several years. I can hear what some of you are thinking: “Ok, Dr. Corrie, fine, I get your point, but if we don’t curb our expenses, we’ll be out of cash in three months. So, what do we do?” Well, here are four things you can do:
1. BE TRANSPARENT Transparency builds trust, and trust builds transparency. Describe the rock that the community is stuck behind. Let them know that cutting jobs is as serious as cutting off your own arm, and reinforce your commitment to wait until the 127th hour before even considering it. Communicate the challenges that the company is facing, and invite input from all levels of employees to contribute to finding novel solutions. Give out awards for the best suggestions. You never know where the lifesaving ideas will come from, but you won’t get them unless you foster an environment of transparency and trust.
2. CREATE A SENSE OF URGENCY John Kotter is my change guru, and I agree with him that the best way to rally your people together for large change is to make small changes that communicate a sense of urgency. It’s very important here to start at the top. Sell the company jet, and rent a Prius for the CEO to come to work in. Put the executive expense accounts on hold. Replace the Chairman’s massive oak desk with a simple round table and six standard office chairs, so that small working groups can use the space to tackle various facets of the boulder with the Chairman and CEO at the table for input. Get rid of anything too shiny, or gold-plated, and put up whiteboards on every available executive wall so that information can be collected rapidly and visually. The community will feel the sense of urgency when the executives change first, and the whole body will start to rally to move the boulder.
3. SUFFER LIKE FAMILY Family suffers together. If you’re really in a pinch, and salary cuts are the only way forward, everyone from the CEO down can take a month of unpaid leave, resulting in a one-year cash savings of over 8% of the total salary. It is not right that one member of the community should suffer totally, when every member can chip in just a little. I know a few companies in Dubai that are offering unpaid leave in 2019. I won’t tell you who they are, but I will boldly tell you that I’m proud of them. Those are good leaders, and if you’re in one of those companies, you should respond to the commitment of your management by being more committed yourself. It’s a strong statement of commitment to the community to choose unpaid leave over redundancies in hard times.
4. PUT IN THE 127 HOURS Have you bled enough, screamed out to your clients and suppliers for help, waited for a rescue, or a miracle? Are you so committed to keeping your people that the big consultancies are telling you that you might be going a bit insane? Hallucinating, perhaps? If not, then you simply haven’t put in the hours. Don’t let the termination papers for your people even touch your left hand, until the insolvency papers are in your right. Then, and only then, you can cut off your arm to save the body. Cutting jobs prematurely is not courageous, it’s leadership cowardice and employee cruelty. These are hard times, and our people deserve brave leadership.
So, why don’t you see the global consultancies on my work history? Well, to be transparent, it’s because I’ve often seen the aftermath of the dull blade of redundancies in organizations struggling through the rehab years. I’m more of a boulder-mover than an arm-cutter. I think the courageous thing is not to focus on the arm, but on the boulder. Aron struggled to move the boulder for 127 hours before finally cutting his arm off. Brave leaders should view jobs cuts as at least as serious of a decision from a corporate community perspective. That’s meaningful management.
If you need help moving a boulder, reach out to me. I promise not to cut your arm off.