…and other observations from finance-savvy HR experts about the difficult job of downsizing.

David McCann - CFO.com | US

January 15, 2009

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With layoffs continuing to pulsate through Corporate America, CFO.com sat down with three veteran business management experts to talk about the thought process behind head-count reductions, alternatives to that drastic step, and how to move forward if you take it. The panelists — they were interviewed separately, but their comments have been woven together in a panel-discussion format — include:

• Jason Zickerman, CEO of The Alternative Board, a 19-year-old firm that provides peer-to-peer advisory meetings and executive coaching for small and midsize private companies. Earlier in his career Zickerman was an accountant with Ernst & Young.

What’s your opinion of all the layoffs? Facts and circumstances obviously differ from company to company, but in general, do you think corporations are cutting the right number of people? Too many? Too few?

Zickerman: It has been demonstrated time and time again through the years when recessions have hit that during the good times organizations had gotten fat. I’ve been around companies that got rid of 20 to 25 percent of their workforce and didn’t skip a beat.

But one of the big things many companies are overlooking is what it costs to rehire and retrain. An analysis of that, at a minimum, allows you to re-look at who you’re letting go versus just picking the ones with the least seniority or the highest paid. Forget those rules of thumb — they’re very shortsighted.

What else can companies do to avoid layoffs?

Zickerman: One alternative that a number of our members are looking at is moving some or all staff from a five-day work week to four days. Everyone stays employed, but you reduce payroll expenses by 20 percent.

If you communicate that properly, telling employees that you’re doing everything in your power to ensure the least-possible amount of layoffs, that you’re fighting for them and protecting them, you can get a morale boost, whereas a lot of companies are getting flattened on morale.

Or, instead of two or three weeks vacation, give five weeks, but two of them unpaid. The interesting is that the younger generations who don’t have mortgages or tuition almost look at that as a perk. It’s not as big a deal to that segment of the work force as a lot of people think.

Won’t going to a four-day week reduce your productivity by 20 percent?

Zickerman: That’s absolutely not true. The fact is, people fill their week with the work. They will be more efficient and effective, spend less time at the water cooler, stay an hour later, and get the work done.

What lessons will companies have learned from this period of intense pressure to cut costs?

Zickerman: If employees are going to be more in the weeds because of less hands on deck, you should stop to celebrate the small successes. If your organization was one that celebrated only when the big deal closed, don’t do that. Celebrate at milestones so people feel progress, which builds a winning attitude.

Companies also should help employees understand that because of what’s happened, we’re doing things differently. No one wants to feel that people were let go but nothing has changed.

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If you need to downsize in your company, you might be interested in TAB President Jason Zickerman’s recent comments featured in Business Week.

Stopping Survivor Guilt

As a senior manager in an era of massive layoffs, it’s your job to stave off survivor guilt before it lowers the morale and productivity of remaining employees

By Rebecca Reisner

From Guilt to Resentment

Members of the Baby Boom generation on your staff may be particularly vulnerable to the anxieties surrounding layoffs. “Younger people are more comfortable with the idea of people moving around and changing jobs a lot,” says Roy Cohen, a career counselor and executive coach based in New York City. “But baby boomers have the idea that you’re supposed to stay in the same place.”

So why do surviving employees, with their newly enlarged workloads, spend their time feeling guilty about layoffs they had no hand in perpetrating? “It’s not a rational reaction, but it’s only human to think ‘Why them? Why not me?’ ” says Spanier. “They feel sympathetic toward the people who lost their jobs and worry about their well-being, their economic situation.” Wikipedia defines survivor guilt in general as “a mental condition that occurs when a person perceives himself or herself to have done wrong by surviving a traumatic event.”

As an adjunct to the sympathy they feel for laid-off co-workers, employees go through three self-centered stages, says Jason Zickerman, president of the Alternative Board, an executive consulting firm based in Denver.

1. Whew! I made the cut.

2. I have to do all this work.

3. They don’t appreciate me.

“You’ll see changes in personality. Outgoing people now being silent. Work isn’t as good, and absenteeism rises,” he advised. “There’s anxiety and pressure, the beginning of depression in the case of some. For employees, layoffs are not in their control, and whenever someone else is holding the puppet strings, it’s stressful.”

Soon, the business itself can feel the effects of survivor’s guilt on its bottom line. Fortunately, business consultants say, survivor’s guilt is highly responsive to treatment if senior management acts early and often.

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Ted Reynolds - President /Founder                                                                                                                          TEAM Funding Solutions, Austin, TX  

Learn About TEAM Funding Solutions

Ted has been active in the equipment leasing industry since 1987.  He is the founder of TEAM Funding Solutions, which started in 1992.  TEAM has a unique market niche: Funding equipment leases for weaker credit business owners throughout the United States.  These business owners typically have a credit weakness or are brand new in business.  Therefore, traditional banks will not lend to this sector of business owners.

Back in 1992, Ted recognized that almost no one was serving this unique sector of business owners.  Ted comments, “The truth is many business owners endure financial hiccups throughout the life of their businesses; and many of these people are excellent business operators that deserve credit, when given an opportunity to tell their story.”  The TEAM company mission is “Helping Customers Realize Their Business Dreams!”  In other words, helping business owners obtain credit that traditional lenders will not consider. 

The credit approval process is quite intimate; the TEAM staff collects financial statements and conducts a telephone interview for every customer that is approved.  Ted likes to say, “We roll up our sleeves to understand their story!”  It’s really a form of old-fashioned lending to people aspiring to grow their businesses.

Q&A

Why did you name the company “TEAM”?

Ted named the company “TEAM” to create a work environment that encourages staff members to combine their strengths with sound business practices.  TEAM has a staff of 11 people.  Every employee at TEAM has a written “Elevator Pitch” and 1-3 simple metrics that are recorded and measured weekly.  The TEAM Staff has a “company huddle” every Monday morning.  Ted states, “No one is allowed to sit down.  The huddle is designed to last 5-12 minutes where employees report their weekly results.  This culture substantially reduces time in needless meetings and enables all of the staff to keep a pulse on the business.”  Ted then meets with every employee, once a month, for about 5 minutes, to review their metric performance.  The company culture tries to remain nimble which minimizes the bureaucracy that can slow down the productivity of employees.  

What are your long-term business plans?

We definitely have long-term plans.  Currently our company plan is to double our sales volume by 2010.  My personal goal is to build this business as a legacy company, one that can prosper for years to come.  I believe that any business that is managed well can be sold at anytime.  However, the long-term plan is to hold on to it, continue to improve our processes and provide the staff a long-term place to work at.  Years ago, I had a couple of friends die at early ages.  This experience made me look at the journey of life and how important that journey is.  Therefore, I have also stopped worrying about retirement… as long as we are having fun and remain passionate about our daily work, I see no reason to stop working.

Ted and his wife, Cathy, are both from Minnesota.  They are blessed with two sets of twin boys.  He enjoys coaching his kids, golfing, hunting, fishing, and vacationing with his family.

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If you want to be great in 2009, simply model the behaviors of leaders who have consistent records of greatness.   Achieving greatness in 2009 consists of three components:

• Thinking
• Behaviors
• Alignment

Check out this excellent article on Becoming Great from Ray Brun, who directs The Alternative Board in the Bay Area of California.

Happy New Year and Best Wishes for Health, Wealth and Prosperity!

Joe Zente

How Your Business Can Be Like the Miami Dolphins in 2009

The biggest one-season turn-around in NFL history! Worst to First. How does a team go from 1-15 to 11-5 in just one short year? The answer is simple. When Bill Parcells took over the reigns in Miami this year, the first thing he did was let everyone there know that losing would not be tolerated.  He had won everywhere he had been and the Dolphins would be no exception. He started out by raising the standard from Good(or was it Awful?) to Excellent.

Once those who accepted losing were kicked off the bus, everything else fell into place, because there was no one to drag everyone else down. And that, my fellow business owners, is how you are going to make it easier for positive change in the challenging year ahead.  That is how you are going to go from good (or bad) to great. There will be no shortage of gloom and doom and naysayers in 2009. To survive, you must be around people who have a mindset of “I refuse to participate in this recession!”

Parcells fired all the leaders of the 1-15 calamity and hired a disciple of discipline, who had been his offensive coordinator when Parcells was the Big Ka-Tuna for the Cowboys. He then went on to do what all great companies do, and what Jim Collins, author of Good to Great calls, "getting the right people on the bus”. Collins had discovered in his extensive research that great companies made it their top priority to get great talent. For Parcells this meant 29 new players out of a 53 player squad. Out with all those who weren’t right for his bus and in with those who were.

I find it amazing that with new front office staff, new coaches, new players and a new system that everyone had to learn in a short period of time, they still went from 1 win to 11 wins in just one season. What would happen in your business if you went “Out with everyone who accepted failure, In with those who would do whatever it takes to win?”

Members of The Alternative Board have heard what Collins says- “Money is a commodity but Talent is not”.  Here at TAB East Bay North we have honored many members with, “The Good-To-Great TAB Bus” as reinforcement to taking positive actions. Actually for most of the award winners it was not because talent they hired but because they finally harnessed the support and accountability they needed to make the tough decisions and get certain people off the bus. Attitude was right there with Talent when it came to improvement.

Speaking of attitude, this week’s Fairfield Daily Republic asks, “What housing crisis?” as it discusses TAB East Bay North member Steve Spencer, managing partner of Gateway Realty in the article, Realty Firm Turns Tide in November. The DR says Gateway Realty “posted their best November in five years”, but I know that this was actually their fifth straight strong month.  I am not surprised that they are profitable during a recession because Steve has always stood firm with his philosophy of looking for opportunity when others just see problems. Steve, his partner, Bev, and their hundred-plus real estate agents have managed to survive one of the toughest markets anywhere, Solano County, and are now leveraging on the unique opportunities of an emerging entry-level market and investor opportunists.

Please pardon my USC bias for just one more football example of what you must do in 2009. Eight years ago, Peter Carroll was brought in to coach a ghastly football program of losing at the University of Southern California.  For seven straight years he has continuously pounded his philosophy of “Win Forever” deep into the fibers of everyone associated with the USC program. His positive mindset as represented in that simple two-word mantra has been internalized by every USC team member.  They have gone on to deliver him seven straight top-five national ranking finishes, seven Pac-10 championships, seven major bowls, and seven 11-win seasons for the USC Trojans.

What is your philosophy? Can you state it in one short sentence?  As you develop your philosophy, remember that wherever you need to improve, all you must do is to change old belief systems and automatic, moment- by-moment "unthinking" thought patterns. What you do dictates what you get in your life. Thoughts and beliefs of yourself and your people are what determine what you do and how well you do it. All growth starts there. It starts inside your mind.

What is in your mind as you begin 2009? What is in the minds of your team members? Can you think of any time in our business lives where this type of mindset and leadership has been more important?

From the team here at The Alternative Board, we wish you a Happy and Prosperous New Year.

Ray Brun

Owner/Facilitator of TAB East Bay North

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