Steve Yastrow

As a corollary to laziness, people also make across-the-board cuts through ignorance. If an executive isn’t engaged with her employees, she won’t know their strengths and weaknesses. When a budget shortfall looms, she won’t have the knowledge required to make good decisions.

Sometimes that ignorance isn’t the result of laziness but (even worse!) is the result of arrogance. Some executives make decisions without the input of the employees who will be affected by those decisions. An individual employee will have better knowledge of the job role he performs every day than will the executive who manages him. If the executive gathers input, she will be able to make strategic decisions for the benefit of the entire company.

It’s not just lazyness (although that is often a factor) it’s sometimes that execs lack the information to make these decisions. Many large orgs have a singular lack of real clarity about their numbers and performance.

this is often difficult to simply turn on when things get hard – there has to be an ongoing discipline and infrastructure (systems, processes etc) to deliver consistent numbers accuratly so that decisions can be made.

Hi Paul – Our points are very complementary. Not only do you need to get the information from your employees, you need a way to store, remember and use it. What kinds of systems and processes have you found work best?

hi Steve,

you mentioned that the cut should not be across the board but should be customized according to situation.

it’s a great theory, good logic & common sense.

my question is: if you’re leading a 1000 employee firm and the board / investors are hounding you for some quick cutbacks.

how do you find the time to assess each situation and come out with a well-thought customized plan with the best combination stating the – where, who and how -would be cut?

if you’re in their shoe, what would you do? can you elaborate on your specific action plan?
(you may pick one of the company that is cutting across the board that you think shouldn’t)

rgs
leonghw

rgs,

A person leading a 1,000 employee firm — if he’s truly “leading” it, should not find himself in a situation of scrambling for information; moreover, he shouldn’t have to make the decisions as to where the cutbacks could be made without his leadership team being involved in the decision. A good leader is like a good ship’s captain. He doesn’t stay hid out in his quarters and only come out when there’s trouble. Rather, he’s always surveying the surroundings, looking at the horizon, and constantly in touch with his officers so that he’s aware of what’s happening. It the captain is a good leader, he wouldn’t come busting out of his quarters to find out the ship is in the middle of a hurricane. He would have known they were headed for it and already been preparing and adjusting course.

Steve,

I’m with you, my friend. Pareto is alive and well. Pareto’s law and the bell curve can be applied to this situation. 80% of your waste (or at least your least critical spending) can most likely be attributed to 20% of your operations.

Sometimes that 20% of your operations lies in areas that feel “untouchable.” Perhaps it involves people you really like and don’t want to see taking hits while other employees seem to go unaffected. In a perfect world, fairness could be applied and everybody take proportionally equal reductions. But businesses and people don’t exist in a perfect world. If you don’t target the reductions wisely, you greatly increase the chances that everybody ends up out of work anyway.

Find that 20% that’s causing 80% of the wasted effort and money. If you can’t improve it fast, the reality is that some or all of that 20% needs to be cut. Soon. This is not just a good idea during an economic recalibration, it’s a good idea in GOOD times as well. Unfortunately, when times seem good, we rarely think about what storms might lie ahead and, thus, we don’t use our better judgment and plan and prepare for them.

Steve – I am so very much with you. Having longtime family friends who are senior executives in two of the three auto companies here in Detroit, it is simply amazing how easily cuts are made without even having a program or platform in place. If you don’t have either, how can cuts even begin to be made? It seems like a no brainer, right? Well, it isn’t. I can only imagine that other companies in this time of recession are doing the same indiscrimantely based on some vague idea of revunue and profit.

“Sometimes that ignorance isn’t the result of laziness but (even worse!) is the result of arrogance. Some executives make decisions without the input of the employees who will be affected by those decisions. An individual employee will have better knowledge of the job role he performs every day than will the executive who manages him. If the executive gathers input, she will be able to make strategic decisions for the benefit of the entire company.”

Amanda – This is an excellent point. Thank you.

Ah, Amanda, popping through again I see that you are actually the author of this thoughtful post. My bad. Thank you.

I want to say – thank you for this!