Facing Tough Times? Don't Slash and Burn

08/20/08

Companies all over the country are facing reduced revenues and profits, pushing some to the brink of panic. But before you give in to panic by slashing your budget or headcount thoughtlessly, take a deep breath and look around. You have one resource that can help you weather a storm of poor financial results—your people.

That’s the word from Richard Axelrod, head of the Axelrod Group, Inc., in Chicago, and author of Terms of Engagement: Changing the Way We Change Organizations. “Problems may be easier to solve than you think,” he says simply. “Avoid knee-jerk reactions”—like laying people off—“based on what your balance sheet is telling you.” Instead, HR managers and others can help reverse financial problems by tapping into the ingenuity of the workforce.

1. Share the TruthThe first step, according to Axelrod, is to let everyone in the company know what the true economic reality is. If you’re facing a revenue shortfall of 20 percent, for example, tell everyone what this could mean in terms they understand—possible layoffs, budget cuts, reductions in benefits, etc. “Get people involved as soon as you can,” he advises.

2. Invite Wide Input With the problem laid out for all to see, ask for help solving it. “Tell people,” says Axelrod, “that the company as they know it no longer exists. Ask them to answer this question: ‘If we could remake the company into something else, what would it look like?’”

All your people will have ideas to share. Everyone knows of a way to save money, do something more efficiently, or increase revenue. At this stage, you want ideas, and lots of them. “Be prepared to do a lot of listening,” says Axelrod. “And get ideas from all quarters of the company,” he adds. “The more diverse viewpoints you have, the better the chance for a creative solution.”

People will have especially good ideas to save layoffs. “Some will suggest job sharing or even cutting their own salaries,” says Axelrod.

Whatever you choose to do, you’ll get buy-in from your employees—because you are, in many cases, acting on their suggestions.

3. Let Them Act
“Once you have a picture of what you want to do,” says Axelrod, “let people move on it. If you make the process bureaucratic, you’ll kill it.” By letting employees take care of the details, they’ll invest themselves in the success of the plan.

4. Share the Pain
Good results depend on trust in leadership. “There must be a sense of equity and fairness,” says Axelrod. Leaders, for instance, shouldn’t continue to get lavish perks while others lose theirs. Richard Axelrod believes hard times can be an opportunity. “By mobilizing people, creating a sense of emergency, you can bring out the best in people. Petty squabbling goes away as people focus on the survival of the company.”

It’s an opportunity, in short, to reinvent the organization for the better.