So let’s cut to the chase. Corporations and businesses, both big and small, are currently re-defining the way in which work is done, unless they’ve completely shut down and closed their doors of course. For those employed in essential services – food services, transportation, utilities, emergency, medical, and healthcare services, amongst others, you may be working even longer hours than you were previously. And for companies that are still producing products and services, albeit in new and innovative ways, why did it take a global pandemic to have them think differently about serving customers – finding cheaper, better, and faster ways to do it? Now I realize that sounds awfully critical, and I also realize that this global scourge has caused us to look at things like we never would have otherwise, but I offer this provocation to make a point. Too many corporations and businesses are bloated with excess costs, costs that end up being paid for by customers paying more than they should. And if they are public companies, shareholders earn lesser returns than they could. And all of that makes employees more vulnerable, as companies become takeover targets, ripe for extracting value, if they don’t get this right.
Why aren’t companies continuously looking to aggressively re-engineer their processes for providing products and services to their customers – manufacturing, supply chains, distribution and delivery, sales, etc., all in the name of reducing costs to customers and/or maximizing profits? Why aren’t they operating with a lean, streamlined management team that has learned how to do more with less? Small businesses know this better than anyone, as they typically can’t afford to absorb additional costs, and they know exactly how to maximize profit margins.
Now I know many will say that they do just that – operate lean – but I’m not buying it. I’ve read article after article recently from consultants and others, advising businesses among other things, to cut out all the waste, the unnecessary costs, in order to speed up cycle times to deliver the products and services that customers want and need. Having worked with consultants for decades, their first recommendation, followed by their second, third, and fourth, is to slash unnecessary costs – in organizational structure (spans and layers), supply chain, work management, you name it. And they would be right. As an industrial engineer, I’ve been trained to see everything in terms of efficiency. In fact, a big part of my career was spent improving productivity and cutting costs. I’ve seen the bureaucratic excess of big corporations, and I’ve been part of and/or led, efforts that have literally taken hundreds of millions of dollars of cost out of businesses. And there was still much more to go, when the appetite to continue by senior executive leadership waned.
Now look, cutting costs isn’t simple. Quite frankly, cutting costs is hard – hard for lots of reasons. People in the workplace see waste every day, and they kibitz about why things aren’t done more efficiently, but then the realization sets in. Cutting costs, typically means, less labor and less overheads. Translation? – less people, primarily, and that’s tough stuff, especially where there are labor contracts in place, and even where there aren’t, you’re affecting peoples’ livelihoods. And if you have any human decency and morals at all, you’ll realize that letting someone go is the hardest thing you will ever do as a leader.
But no excuses, corporations. At times, the leadership courage to do what needs to be done is lacking, for all kinds of reasons. People are generally conflict avoiders, and cutting costs and all that it entails, is rife with conflict. Regardless, use this event to re-engineer how work is done, permanently, in the interest of all of your stakeholders. If this means you don’t need the labor you once did, and you’re worried about the impact to morale if you announce permanent job reductions, then use attrition as a means to reduce the workforce over time, or offer some type of severance that employees might actually take you up on, or expand your product line and business and reassign workers to perform that work or to launch the new business.
There are lots of creative ways to make this happen, and corporations have been doing this sporadically for decades, but the bottom line is – as public companies, they have an obligation to customers, employees, and shareholders, to produce and offer products and services at the lowest possible cost. Competition ensures that. And every stakeholder benefits – customers pay less, shareholders earn more, employees are inspired and motivated to learn new skills and might actually be more secure in the new environment where your products and services are now kicking ass in the marketplace. All of this is consistent with the profit motive of corporations and capitalism, although it is not always aligned with the political machinations of the corporation.