Jeffrey Saltzman's Blog

Enhancing Organizational Performance

Downstream Wash & Dry

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There is an old fable that goes something like this: A father was giving his son some advice. The father asked the son what skills he would like to learn; how he would like to earn a living. The son said that he would like to learn to wash clothes in the river. Washing clothes being a good honest trade, he sent his son down to the river to learn and told him “Become the best clothes washer you could possibly be”. The son worked very hard and opened a small clothes washing business called “Downstream Wash & Dry”, and soon his work became known for producing the cleanest clothes possible and he prospered. People stood in line in for hours to get their clothes washed by the agreeable washerman. A few years later a paper mill opened upstream from the son’s business, fouling the river water. No one wanted their clothes washed downstream of the paper mill. What was the son to do? He checked the village records and found that the paper mill was operating legitimately and had all the necessary permits. He then checked with the landowners above the paper mill to see if he could purchase any land close enough to the village so he could successfully relocate his business and found that all the nearby land had been bought up by a company called “Upstream Wash & Dry”, which had just opened a franchise in town. The competition, upon seeing the success of Downstream, had been paying close attention to the changing environment, waiting for an opportunity to clean up and grab market share. The moral of the story: Simply being very good at something can become irrelevant if your operating assumptions don’t keep up with the times. This fable has a happy ending (as fables should), for the father was watching over his son’s business and had already invested in “Downstream Water Filters”, whose products allowed the son’s business to continue.    

If the first time you are thinking about how to manage your business or your employees through a down business cycle is when you have already entered a down business cycle, do yourself a favor—turn off the lights, lock the door and go home. The time to think about these things, like so many other things in life, is prior to when you actually need them. No one, at least not many, would think about retirement for the first time on the very day they were to retire, and no one should be thinking about how to manage in a down cycle for the first time upon the realization that they are in a down cycle. “Now let’s see, where did I put that magic button?” Having said that, if we assume that some prudent steps were taken prior to the down cycle, there are some things that can help ease an organization through a downturn.

How do you motivate employees to do their best at work during a downturn, especially when the future is uncertain and layoffs are possible?

I would answer that question with another. How did you motivate employees prior to the downturn? While there may be some nuances to operating in a downturn, good business practices are still good business practices. If you have built a reputation for open and honest communication, that will stand you in good stead with your employees and during a down cycle you want to increase the frequency and amount of communication even when the news is bad. During times of turmoil people’s desire for communication increases exponentially, so while the natural tendency may be to withhold bad news, it is better to increase the information flow. A lack of information will cause people to fill in the blanks—and they will generally fill in the blanks with an imagination that creates worse scenarios than the reality.

But communications is simply process. What should you be communicating about? Message. Now is the time to unveil the plans you had developed during the good times and let people know how you will cope with the bad. What are the timeless principles by which the company will continue to operate regardless of the environment? What will you do? How will you treat people? How will you cope with lower business volumes and potentially shrinking market share? Performance. What will the organization do to enable people to get their jobs done and done well? What new strategies will be put into place, what new products that are more attractive in a down market? Future. What are the compelling reasons why someone should stick around and help the organization make it through a down cycle? What is in it for the individual? 

What can an organization do to show its top talent how crucial they are and prevent them from jumping ship?

If all your talent is not crucial to your success that means you have not been dealing with issues that you should have dealt with prior to the downturn. Using the downturn as an excuse to deal with performance issues, under the banner of “downsizing”, will be transparently seen through and is potentially alienating to other employees. In other words, the organization was looking for an excuse rather than dealing with issues on an ongoing basis. People who are able to help reinvent the organization, its products and services and its ways of operating will be crucial to the long-term success of the organization and should be rewarded appropriately. The traditional rewards such as money and opportunity are traditional because they have been found to work.  

If your company is forced to lay off people, how do you then reassure and engage those that are left?

Alternatives to the layoff should be considered first. Can other operating costs be cut? Will some take an early retirement if it is offered? Can an across-the-board pay cut be implemented so that everyone can stay employed? Are some willing to go to a part-time schedule? One of the privileges of being in management is that they should take the lead in suffering during a down cycle. They should be the first to take a pay cut and they should be cut the deepest. If a layoff does happen management should also be laid off in equal percent to the non-management employees, rather than being viewed as a protected group.  Those companies that can retain their talent though, assuming that they have been dealing with performance issues on an ongoing basis, will be better positioned to flourish in the recovery. If a layoff happens, it happens as a last resort, not a first choice. It should happen all at once and not in a slow drip kind of fashion. Once completed, the staff should be told that the downsizing is finished as long as market conditions are stable. Based on this approach people will recognize that the company operates in a manner that tries to protect their employment to the extent possible and that when pain is to be suffered it is suffered in a fair and equitable fashion and that will provide reassurance.

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