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If your staff count has decreased, you've experienced the
struggles that come with lower morale, lost trust, and uncertainty
about the future. At that very point in the cycle, things will get
worse before they get better. You are charged with working harder,
smarter, longer, and leaner—all with less motivation than you
So why is this part of the series entitled “Thriving Lean”
instead of “Surviving Lean”? Silly platitudes are just
that—silly—but your firm, if it survives, will be stronger for
having squeezed through a lean period. So many things that you
should be doing would never happen unless they were forced on you
in a lean period. Let's look at what those are, first.
Remember, too, that we are not talking about “lean” as a
business strategy, but rather an enforced leanness to get through a
tough time, caused by internal or external circumstances. The most
common are a downturn in the economy as a whole, the loss of a
client that represented too much of your business in the first
place, or a partnership dispute.
As noted above, sometimes it's only the inevitability of your
situation that provides the courage to make those tough choices.
When you look back on the decisions you make now, you might realize
that this “lean” period was a watershed that set you on a path of
great prosperity. The vast majority of our clients have found that
to be the case.
Not to get too philosophical here, but in my own experience the
things I am most confident about now are the things that I
struggled about earlier. Failing in the trenches has taught me
invaluable lessons. In fact, I tend to coast when things are going
well. It's pleasant and relaxing when there is no financial
pressure, but my life does not typically improve any more than
incrementally when that is the case.
In your case, these good things that emerge from leanness might
help you thrive... eventually.
Better client base. Your first tendency in a
lean environment is to take any work you can get. You then might
compound that first mistake by making another: keeping staff in
order to lose money servicing clients who aren't a good match.
Even though it seems counter intuitive, don't ignore
profitability just for the sake of cash flow. That fallacy is partly
how you got here in the first place. You've got to be choosier, and
there is no better time to start. If you must cut staff, too, just
for cash reasons alone, you will soon face capacity issues as your
frantic marketing efforts pay off. When that happens, pare your
client base back even further before adding staff.
Better employee base. You probably grew up
hearing the notion that last hired equals first fired. That might
be integral to some union contracts, but it's not a good way to do
business in a lean environment. Dismiss people purely on the basis
of what you need and how suited they are to meet that need, and in
so doing you will raise the average competency level of your staff.
In an environment with lots of work, you tend to overlook
performance issues because you are struggling with getting the work
done in the first place. Not so when things are lean.
Build teamwork. Want to find out what people
are made of? Go through tougher times when the difference between
selfish and unselfish choices is more apparent. Some people will
surprise you and some won't, but there will be no mystery about who
is fair, hardworking, and committed for the long haul.
Better prospective employee pool. When it does
come time to replace an employee, either through attrition or from
your renewed growth, there will be more good choices than during a
time of economic strength. Salaries will not be as high,
“attitudes” will be less prevalent, and great candidates will be
Comprehensible financial data. During leaner
times you will no longer be able to ignore financial data. You will
not tolerate late statements. Mistakes or misclassifications will
annoy you. You'll want the data crunched any number of ways. You'll
be amazed at the kinds of decisions that other people are making
with your money. All of these changes are good, and you will never
understand the financial pulse of your firm more than during lean
Trimmer operations. You'll understand the
difference between what you need and what you want. You'll quit
subscribing to publications that you don't read, you'll ask
employees to share in the cost of continuing education, you'll
finally do something with all the extra space in your facility, and
you'll force the issue with your ISP.
Fewer competitors. Many of your competitors
will not make it, thinning out the competition and raising the
likelihood of your landing any given project.
Greater shareholder control. Are you stuck
under a burdensome partnership agreement? Are some partners less
interested than others in fighting through the mess? If you have a
variable valuation formula, now's the time to apply it and return
to a smaller management group. The more “owners” there are, the
more your decision making will avoid risks and become unremarkable.
Even if you don't have a partnership agreement, the present
circumstances will tend to play into the hands of those who want to
Renewed personal commitment. As opposed to
letting momentum define your commitment to the firm, lean times
force you to reexamine your role, how you can contribute, and how
much you really care. You'll emerge with a much clearer perspective
on what the business provides to you and what you need to do to
enhance its ability to keep providing that. It's like signing that
five-year lease again for your facility, forcing you to examine the
depth of your commitment.
Why even talk about these things? Two reasons.
First, you need to balance any negative pressure you feel about the
leanness you are working through with the knowledge that good
things are happening, too. In addition, you need to embrace the
opportunities that leanness provides. They are good.
But they aren't all good. Some of them are bad, so let's not
live in denial. Here are the three major ones that relate to
Employees with survivor remorse. Survivors suffer as much as
those laid off. They feel guilty for their “luck” in not getting
dismissed. They feel badly for their colleagues that are gone.
When you dismiss employees, make sure you don't provide them
with more support than you are providing those that stay. Sadly
enough, those that remain may feel trapped in a co-dependent
relationship with an uncertain partner that they might not
Conflicted managers. Managers in lean situations are charged
with unusually conflicted roles. They must act as the “tough guys”
and also as the people responsible for promoting healing and
raising morale. Their empathy with employees (and even co-workers)
can make it difficult to carry out the turnaround mandate.
As Delorese Ambrose has noted in her work on surviving lean
times, managers are to wield a cost-cutting ax and be a trusted
coach. They are not allowed to fail but they must take risks. They
may have to shrink the workforce but still grow profits. They must
maintain stability but still be a visionary for change. All this
can be agonizing.
Paralyzed owners. It is difficult to focus on long-term goals if
the short-term future is in doubt. Long-term stuff is taxing and
requires a unique commitment, and if your motivation is dimmed at
all, it will be difficult to concentrate. In somewhat related
fashion, the entire decision making process in a lean environment
“I've never needed marketing more than I do now, but should I
spend the money?”
“My new business development person has been marginally
effective. Do I stick with her or start from scratch? If she isn't
going to work out, the sooner I change, the sooner we'll be back to
speed. But if she does work out soon, and I switch her prematurely,
I've wasted five months of ramp-up time!” You get the point. These
questions never stop.
But most of the tension and confusion relates to handling
employees (particularly if their fellow employees are cut), so
let's look at these in particular.
Any employees who are dismissed lose friends and income. Those
who are not dismissed lose friends and stability. But even if
dismissals are not part of your lean times, there are changes afoot
and employees look to you with renewed interest as you respond to
the events unfolding around you and them together.
We could talk about the steps that employees go through during
lean times as they process the changes occurring in their
environment, but the most important critical step is that you face
Listen to Delorese Ambrose's admonition.
The most critical step in the healing process is facing the
reality of the situation at hand. Yet this is also the most
difficult step to take. Human nature dictates that, faced with the
shock of an affront to our security, we first turn to denial. In
this state of disbelief, we find a momentary, and necessary, safe
harbor. Our denial inoculates us against the dis-ease of our
losses, giving us a chance to maintain our bearing and perhaps
maintain our sanity. Our denial holds the promise that perhaps
things will return to normal; perhaps the situation in which we
find ourselves is a temporary aberration that will right itself
under the pressure of our protest. Such is the case with today's
employees and their employers, faced with the challenge of a
dramatically changed workplace in which old promises and cherished
premises no longer hold true.
So rather than talking about all the stages that employees go
through, let me talk about what they are looking for from you. This
comes from years of experience in helping firms like yours walk
through lean times, either helping directly, on-site, or from afar,
over the telephone.
During this certain disruption, employees need to know that they
can relax. They can only relax if they think that the ship is in
good hands. And they'll believe that it is in good hands if they
have satisfactory answers to these three questions.
Are these people competent? Employees don't need you to be
totally competent, but they do insist on a basic level of
competence. They understand that there is some information that
they do not have, and so a certain amount of trust is involved. But
they know that you have all the information, and they are
(hopefully) comfortable that you will make a competent choice.
Have you largely made competent choices? Chances are that you
have, and thus employees will give you the benefit of the doubt. If
this is not the case, then they are probably being influenced by
your spending decisions, growth decisions, hiring decisions, and
positioning decisions. In brief, they assume that your competency
before the “leanness” will carry over into the present.
Do they care about the impact it has on us? They understand that
you must make tough decisions. They don't want to be in your shoes
because they don't even know what they would decide if they were,
despite claims otherwise. They don't even mind if you make
decisions that have negative consequences for them, as long as you
have carefully weighed the impact such decisions will have. In
other words, they want to matter. They want to know for sure that
their best interests played a role in the considerations.
Are they acting in a consistently honest, principled way? They
have some control (how hard they work, whether or not they stay),
but employees realize that you are holding most of the cards.
Furthermore, lean times call for sacrifice and tough choices. As
you make those choices, will you do the right thing? And they are
wondering about more than just the right thing as it relates to
them. They care about how you treat vendors, employees,
This is a tough balancing act, frankly. There might be waves of
layoffs, some of your actions might not look like you care, and not
being able to share everything with them seems to point to a lack
of integrity on your part. All the more reason to just do the right
thing without worrying too much about the consequences.
So how do you navigate these waters? Here are some errors you
can avoid in implementing changes during lean periods.
Frankly, following your instincts is more important than
following prescribed advice, but it might be helpful to at least
catalog the mistakes that seem to be common so that you can run
through them quickly as you navigate the leanness.
Denial at the top. The higher up you are in the organization,
the more likely you are to be in denial, even despite the
additional information you have, regarding morale, utilization, and
the likelihood of sales coming through. Check your instincts with
outsiders and key employees.
Poor communication. When significant announcements are made,
don't let communication filter through managers to employees. The
timing and substance will vary substantially. Address the entire
company at once, in person, with concurrent handouts that can be
More work with less help. Though there might not be much that
you can do about it, at least be aware of the pressures that
employees are facing. You are asking more of them, and often they
must accept this task with less support staff. Be sensitive to
Failure to manage cultural clash. There is an inevitable tension
between the old way of doing things and the new way, made necessary
by leanness. On the one hand it's easy to hang onto the things that
have contributed to your success. But as useful as those things
were, they are not appropriate now, and you cannot condone
activities to hang onto them.
Culture can become a proven survival tool over time, and values,
norms, and behavior become ingrained in the unconscious belief
system. This is “the way things are done around here.”
Unfortunately, the culture itself, unless managed carefully, can
become a restraining force against change long after the current
situation is screaming for a new solution.
Promising in exchange for loyalty. Don't panic. Yes, things are
tough, but in expressing your gratitude for the loyalty and hard
work that employees are exhibiting, you can easily over-promise.
Don't be too caught up in the moment and sacrifice your long term
For example, don't give someone a title and/or promotion without
thinking far ahead. Picture your firm beyond its lean stage and ask
yourself if this will still seem like a good idea.
If you promote someone inappropriately, not only will you regret
it, but the person you promoted will easily feel chained with
responsibilities for which they are not prepared.
This is particularly true in offering ownership to
Thinking employees are shareholders. You cannot expect employees
to act like shareholders, as welcome as that would be! They don't
have as much at stake—they only have a job, while you have
financial obligations that go beyond that. They also don't have
much to gain once the leanness is past—at least not as much to
gain as you do.
Pay them fairly and expect them to earn that money, but don't
Convenient open book management. A few firms—a very few
firms—use “open book” management. That is, they are open about the
financial results of the firm, and they do this on principal. They
think it's the right thing to do and they think it will improve
That's one thing, but it's quite another to use “open book”
management only when it's convenient, defined as “when things
aren't going well.”
The point is to use “open book” management when it's good and
bad, or not at all.
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