Thriving Lean

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 might like.

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.

The good that comes from leanness

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 more common.

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 times.

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 continue.

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.

The bad that comes from leanness

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 roles.

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 trust.

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 is difficult.

“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.

Guiding employees through lean times

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 reality.

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, competitors, etc.

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.

Common tactical errors

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 referenced later.

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 their needs.

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 future.

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 employees.

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 expect more.

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 company performance.

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.

Thriving well

• Finally, let me make a few parting suggestions for thriving lean.
• Be an inspirational leader. Everything has changed. People might have new bosses. There is almost certainly a flatter structure with less certainty about where people fit and how they contribute. Confusion abounds.
• It's difficult to imagine a time when the firm needs your inspirational leadership more than it does now.
• Be honest about now and hopeful about then. It would seem like there is an inherent contradiction in being honest about the present and being hopeful about the future.
• Listen up, here. Unless you believe that positive change is possible, maybe someone else should be leading.
• Going through intense, severe doubts on a cyclical basis is part of what comes with leadership, but when you are getting ready to lead a charge, your words should not ring hollow to yourself.
• There is nothing like honesty to set the stage for hope.
• Listen to how one manager addressed the employees who remained after some tough times and a few layoffs. He said that he was excited about working with them, and acknowledged that the restructuring had allowed him to hand pick every one in that room. And he was proud, he added, of the team that was left. Here is what he said:
• With no reservations, I'm betting my career on you. Working together, we're going to do great work, achieve great things. We all have something to look forward to here. It's our future. We can't be entirely certain of exactly how it will unfold, but we certainly can make the most of it. Because we can't do things the way we've always done them, we have an opportunity to do things in ways we've never done them before. That offers each of us an exciting opportunity to grow, to try new things and develop new skills and competencies to enhance our careers.
• This is a great example of honesty and hope combined, while at the same time avoiding dangerous promises that you might regret later.
• Become comfortable with discomfort. Finally, don't put your life on hold. Work hard, but concentrate on doing the right things, not getting rid of the discomfort. Which leads to this important point: lean times are uncomfortable and it's healthier to try to live with a measure of discomfort than do stupid things out of desperation in order to ease the discomfort. Work, wait, hope, be clear, and keep a good perspective.
• Lean times are just part of the new paradigm. Fast ups. Fast downs. Less job security. Always learning and thriving.
• Unless you are comfortable with discomfort, life in your organization will look too much like spinning plates with one hand while putting out fires with the other.
• Managed well, leanness and disruption are very useful things.