First, we agreed that his communication to new and seasoned employees was kay. His key messages included:
- Business will continue – and the best get to work here. There will always be work for the best.
- We will dig deep for what matters. (Which sends the message that the work and the workers who stay matter.)
- Remember to have fun. Because what is fun? Fun is winning.
Then we looked at his company. There had been good years and he had grown and diversified into a number of ancillary and supplemental areas. We had to identify what was CORE to the company. Despite chances for growth and possible upside, we needed to focus on the CORE of what the company did.
Then we started to rate work and tasks from 1-5. 5 was CORE. 1 was farthest from CORE. This was a printing company. But Design Services were added to the Printing and so was Sales, Social Media, Marketing, Logistics, Recycling and several other non-CORE specialties. He took the weekend and rated every item from 1-5. On Monday, we went through each area.
1 (furthest from CORE)
- The Low-Hanging Fruit
- Cut expenses, Suspend Services, Cut Positions
- Control the Controllables: terminate contracts, liquidate inventory
2 (Next ring)
- Cut 401K match (a company wide initiative)
- Require 3 day furloughs, Vacation or Paid Time Off
- Consider wage cuts
- Possible positions cut
- Eliminate unprofitable customers
3 ( Next layer closer to CORE)
- These were the sacred cows
- Reduce expenses
- Focus on the Bottom 10% customer issues – improve profitability or eliminate customer
4 (Closest to CORE)
- Luckily we did not have to go this far to help him see his way through the year.
But there was no doubt he had to make cuts. We started with this premise: If the company was 50% of its size and could only grow to be half of what it is today, who would you start the company with? Not based on titles or tenure. Based purely on what they can contribute to a successful company. Those are the top performers to keep – no matter how hard it is to think about letting Ol’ Joe go who has been with the company for 18 years…because Ol’ Joe can’t really work much outside of his narrow area. He restructured work and jobs. Several people who hadn’t been “pulling their weight” for years were let go. The ones left behind pitched in to change how work got done and businesses that were bleeding the company of resources and focus were eliminated. Top customers were lavished with attention while prospects who bled profits but never paid their way were weaned away.
Today my friend has what he calls “more realistic” ideas about his company’s success and what his company is good at. He says he chased after things just because his competitors did and that now that he has focused on the CORE he and his staff are happier and doing what they do best. Maybe he will expand again into new areas in the future, but for now, he has righted his ship and he know how to survive another financial tempest again.