Cost Cutting for Companies– Bullet Points

We have written a number of articles about cost cutting for companies. The articles have covered companies in a variety of industries and situations. They have summarized best practices and you can read each one of them here on this blog. Cost cutting has become a major focus for most companies.

I am often asked for some bullet points about cost cutting. I could say:
***Plan
***Do
***Review
***Regroup

These are bullet points but not very helpful.

Cost cutting is not about bullet points. You need a much fuller understanding. Bullet points, like those mentioned, are like giving you some general comments about how to build a house and expecting you could go off and actually build one.

You need a much deeper understanding, along with a mentor, advisor, coach, consultant etc. who really knows what they are doing

What is the most appropriate direction to give to you regarding cost cutting? That will depend upon your company’s objectives, what is needed to achieve those objectives and where you currently are in both the business and the costs you have already cut. It has to start with the plan.

What is your business plan? What are you working to achieve and what are the key elements required to enable you to achieve the goals? What are the interactions, such that costs that are cut in one area do not negatively impact other areas? Often changes can cause unanticipated consequences in other functions and processes that cause even more damage. Without a practiced eye to monitor the changes, many companies end up worse off after the cost cutting than before and they spiral down in revenue and financial measures.

What is the impact on your organization? What skills and talents are required and what do you give up in cost cutting? Most companies start their cost cutting with cuts in employees. They often go for the older employees since they tend to have higher salaries. The problem is that the companies are also cutting experience and knowledge that can drastically impact efficiency and effectiveness throughout the organization. Once the “internal IP” that is in the mind of the seasoned employees walks out the door, much is lost and it is very expensive to regain it.

Cost cutting alone is never the correct way to right size a business. Thought and planning must also go into reigniting the growth of the business. That is why the plan and the organization are so critical. Without them the company will continue to flounder.

If I were to comply with the original request for bullet points on cost cutting, I would offer just one.

*** Contact me and I can help you.

Thanks

John

John Maver
President
Maver Management Group
(925) 648-7561
Maver Management

Veterans Day

Today is designated as Veterans Day in the United States and Remembrance Day in Canada. In other countries it is known as Armistice Day. It was originally set aside to mark the end of the Great War (World War I) on the eleventh minute of the eleventh hour of the eleventh day of the eleventh month. This was to be the last great war. The fact that there is now a I behind the name and there has been a WWII as well as many other major conflicts, says that we are not very effective in learning from our past mistakes.

That isn’t surprising since for most people there is no memory of the war, let alone the reason for the designation of the day. Only a few mark the event or the time. While some have a holiday on this day, they don’t use it in memory but rather as a vacation day. As time has passed, we give less and less attention to the memories. When I was a youth in Canada, school stopped for an hour and all the students gathered around the flag pole, where the flag flew at half mast, for a ceremony to honor those who had fought and those who had died for us. There were hymns, songs, readings and poems and it was meaningful. We wore “poppies” that were sold by the Veterans and the bright red made a sharp contrast to the earth tones of the clothes. Remembrance Day was a time for remembering!

Today, it appears that a few veterans get together and remember. Families of the fallen remember and the rest of us just pass by. We just won’t learn and so we are destined to repeat and we do.

You may very well ask what has this got to do with business? The answer is simple. If businesses don’t stop and reflect on what has happened, learn from it and reformulate their plans, they too will be destined to repeat the failures.

As turnaround experts, we see this far too frequently. Executives continue blindly on, doing the same activities over and over and expecting better results. Insanity, right?

Let me encourage all of you to stop today and reflect. Have a moment of silence for the fallen and those who have fought for you and your freedom.

Have another moment of silence for you. Reflect on your life. Reflect on your business. Reflect on what you could be doing differently to get more success. Reflect on the successes and what can bring you more successes.

To the fallen, thank you!

John

John Maver
President
Maver Management Group
(925) 648-7561
Maver Management

Turnaround Consulting - Turning an Organization from Mediocre to Exceptional

How good is your company, organization or division?

The answer is very important because the companies that will come out of the recession and do well are going to be able to answer this in positive terms. Book stores and office shelves are full of books that chronicle the practices of high performing organizations. This list includes “Built to Last,” “The Breakthrough Company,” and “Good to Great.” The problem is that most companies don’t last, don’t breakthrough and don’t make the leap from “okay to fair” let alone “good to great” because these organizations maintain a focus and culture that insures mediocrity.

A colleague, Sandy McMahon who runs Renaissance Executive Forums of Silicon Valley, recently wrote an article about why organizations stay mediocre and never reach their full potential. What stands in the way is “a culture of status quo.” This is a very important concept and yet so simple. As a result of it, organizations do things that will guarantee they will remain mediocre. That may be happening, at least to some extent, in your company and you will want to turn that around.

However, there are some ways that can help you turn mediocre into exceptional. With proper guidance, most companies are capable of achieving vastly more than their current results. Here is my advice.

1 Create and share a single, simple strategic focus. As we have written often, many companies have no strategic plan and if you don’t know where you are going, no road will lead you there. Too many companies have a strategic focus to improve profits. There is no argument that profit is important - it is! In fact, mediocre companies focus too much on revenue and not enough on profit. But what the mediocre companies fail to do is to energize and rally employees, vendors and clients around a short and focused reason to support the company for the long haul. Work with your team and identify a simple basis that will cause all of your organization and stakeholders to work for a goal that is meaningful to them.

2 Provide the “Big Picture” to the organization and not only to the top. In mediocre companies, there is a belief that the rest of the organization are not capable of thinking independently but need to be told what and when to do something. Leaders practice the “mushroom theory of management”, keeping employees in the dark, under a layer of fertilizer. The slave ship scene from the movie “Ben Hur” says it all: “Row well and live.” Now it has been updated to “when we want you to know something we will tell you.” This undermines the initiative of the rest of the organization and does not take full advantage of their potential contribution. Share the plan with them and turn them loose within guidelines. They will dramatically add to the acceleration potential.

3 Expand from single minded top down management. Mediocre companies believe ideas for improvement come only from the top. Ideas from anyone else are dismissed because they come from people who don’t see the “big picture.” While many people in an organization can say no to initiatives, changes and improvements, there is only one person, the one at the top, who can say yes. With every decision resting on just one or perhaps two at the top, it is clear that no one else really has any authority. Both business and employee participation stagnate. Driving down decision making, once the plan is shared, enables all to participate. Progress and profit driving ideas are accelerated.

4 Hire “A”s not “B” and “C” players. Many hiring managers shun bringing in new people with more education, more experience and impressive backgrounds simply because new employees of this caliber are threatening to them. As a result, the organization misses out on the best people and it is always the people that make the difference in an organization. Go for the best and let them teach you too.

The caliber of the organization is also hindered by ignoring training and education. The mediocre company believes that it knows everything it needs to survive, and sees no need for continuing education for anyone. Our surveys of such companies show a consistent lack of development initiatives for employees. The only way to improve is to start with outstanding employees and feed them education and training so that they get even better. Check out the top companies and see their hiring and training principles.

5 Encourage people to step up to new responsibilities and initiatives. In a culture that fosters the status quo and believes “this is the way we have always done it,” those who step up are agents of change and systematically hindered and eventually forced out. If a company follows the sharing of the plan and the decision making with high quality employees, the result will be a dramatic change from the status quo and top management will be very pleased with the results.

There are two corollaries to the reluctance to step up. They are:
a) Nodding heads. In meetings, only a few say anything of substance. The rest simply nod their heads in compliance. There is fear about risking their job by saying anything that could be construed as being disloyal. There is no serious discussion on how to have a better business. Employees must be encouraged to participate and share their ideas. Effective managers operate as gatekeepers in leading their meetings so that all participate and feel comfortable doing so.

b) Resistance to change. This virus, manifested in meetings filled with people who simply nod their heads, moves to the department level once the meeting ends. Managers will take no risks and make no moves without written direction. This is never possible in any organization that hopes to compete in the current fast paced world. Managers must have clear objectives and guidelines within which they can use their own judgment and decision making for improvement. They must be supported and held accountable to make those changes.

6 Institute for pay-for-performance. Mediocre firms believe that if they offer a nice place to work with a steady paycheck and solid benefits, they are serving all the needs of those who work there. This simply is not true! The best people strive for increased responsibility and company and personal progress. They resent having lower performers reap any rewards from the contribution of the top performers. They will look elsewhere for employment and continue the circle that causes mediocre companies to stay mediocre. Set some targets that stretch your employees. Give them the training they need and the motivation to reach the targets. Then watch the acceleration.

The mediocre organizations are easy to spot as well. You won’t find anyone coming in early or staying late because there is no benefit to doing so - no reward for success or the effort that goes with it. Also most often these days, they have signs that say “Out of Business”.

You can turn your company from mediocre to exceptional with some help. Contact us. We have the experience and have helped turn around many companies. You will like working with us.

Thanks.

John

John Maver
President
Maver Management Group
(925) 648-7561
Maver Management