PERSPECTIVE -- Downsize, Restructure, or Renew
New challenges, fewer resources, many unknowns. Instead of the steady growth of the past few years, you now have to cut costs, streamline operations AND grow at the same time. What is a smart executive to do? Renewing your organization begins when leaders dialogue around some basic questions.
As the economy shrinks after a cycle of unprecedented expansion, do you want your organization to hold on, or move on?
Before jumping into the restructuring or downsizing fray, think about where you want your company to be after any cuts you might make. Remember: after the last round of downsizing in the 90's, about 50% of downsized companies were actually LESS profitable and productive than they were prior to downsizing.
How will you keep your service and quality at a level that will keep your customers happy? Will innovation be able keep pace with customer expectations? How will you support your remaining staff to be productive -- and stick around -- after they take on the work of their missing colleagues? Have your managers weeded out poor performers all along, or do they expect to use downsizing to accomplish that? What will those who leave, voluntarily or involuntarily, say about your company when they become customers, suppliers or competitors?
Is restructuring the "answer"? Not if you intend to shuffle positions just to get rid of some. Not if you've done it before and business results didn't improve. Restructuring can be a key part of your solution, but requires more than just re-engineering operations and processes or reconfiguring departments. You also have to be willing to strengthen workforce skills and performance and other management systems, and open up communication between leaders and stakeholders -- including employees.
There may be better alternatives than downsizing or restructuring when you need to renew your business, save money quickly and build a strong future. Does your company's core mission still make sense, or does it need to be reshaped? Will your current leadership vision support the future you desire for your organization or does it need to be refreshed? Do you need to find new sources of revenue or other financing? Will your change strategy live up to the values espoused by company leaders, if you must downsize or restructure? How will you come up with a strategy that supports organizational survival and development -- a strategy that is attentive to shareholders, board members, customers and staff? How will you measure the success of your strategy after all is said and done?
Encourage your leadership team to explore these questions. Your company's future may depend on it.
LGA Consultants, Inc.'s Renewal© program helps leaders think through these and related questions, identify options for cost-effective organizational renovation, and implement strategies that will enable you and your organization to continuously adapt to ever-turning business cycles. Contact us for details. (Also, check out Bouncing Back from Downsizing, in the September/October 1998 issue of the Journal of the AQP).