When the Going Gets Tough, The Tough Get Going

By Jim Dunham
Senior Consultant

Having played sports and served in the military, I have often heard the saying “when the going gets tough, the tough get going.” In today’s business environment, I find that leadership is more essential than ever and that tough decisions must be made with higher stakes than ever riding on the outcomes.

It is during market cycles like the current one, created by economic and market turmoil, that decisions need to be made that can position a company in the best possible ways for continued future profitability and growth. Leaders need to scrutinize every facet of an organization’s operation and take actions that can provide stewardship through the difficult times.

There are five areas during times like these that should receive significant attention: 1) Structure Creep; 2) Management; 3) Poor Performers; 4) Products and Programs; and 5) Market Aggressiveness.

Structure Creep happens to most organizations during good times. Staff and support functions proliferate because the supposition is that controls and extra people support a growing bottom line. The argument is then made that more programs/controls can make the bottom line even better. At that point, areas outside direct customer contact and line operations can explode. The problem is that even in good times, as staff support gets bigger, all the work they generate is passed on to line operations to execute. Those critical customer-facing operations get bogged down in the implementation of a plethora of well-intentioned but cumbersome recommendations. The customer and production costs become the ultimate victims. The best way to attack this issue is to always monitor support-oriented positions and not let them grow at such an unjustifiably fast rate. If staff support has ballooned, the imperative—especially in environments like the current one—is to maintain customer-facing staff levels while reducing the support structure.

Management is crucial to the organization. An organization needs to look for and find managers who are people oriented and who think outside the box to develop ways to better serve their customers at a lower cost. In good times, the number of managers tends to grow and the ratio of management to production employees gets smaller. However, an organization should regularly aim for a ratio in the range 1:15 to 1:20. It is important to evaluate management using the key components of employee input, critical thinking, and accountability to improve results. No one should get a “bye”–only effective management in smaller numbers and fewer layers should be retained to keep the organization vibrant.

Poor Performers should be eliminated. Unfortunately, too often organizations let mediocre or even the worst performers stay onboard. Managing performance is the number one measure of a good manager. If an employee is given an opportunity to improve and doesn’t, keeping them around does the organization a disfavor. Speed in dealing with performance is important because maintaining poor performers over a long period brings down the entire organization’s performance levels.

Products and Programs should be reviewed to see if they are customer-oriented, profitable, and not counter-productive. Many products/programs are kept because one customer likes them or a senior manager is enamored of them. The fact is, many managers are not adaptable to changing needs or environments. Programs are started, take on a life of their own, and then are maintained at the expense of efficiency because things have “always been done that way.” To eliminate non-essential products or programs, you have to go through your portfolio—meticulously—and make sure that all programs and processes support the organization’s direction and profitability. If the answer is no (don’t accept “maybe”), eliminate it and the work and resources that go with it.

Exercising Market Aggressiveness during economic upheaval can work to your advantage. Your competitors are probably struggling as well, so if you eliminate unnecessary costs and poor performers, you can channel your efforts toward aggressive market activity to capture business from those in your environment that are not adapting as well to the changing times.

Look at the landscape and use lasered opportunities to create growth in tough times. In down times, the company that improves its position in the market will experience greater profitability and faster growth when recovery starts.