Right-sizing your organization for Recovery

Many companies faced layoffs during the past year as the economic downturn continued.  If your company was one of those, you may soon find yourself facing the other issue of deciding who or how many people to bring back.  The question “what is the right size for my organization to be?” is an important one – and sometimes a difficult one to answer.  The value of your company is directly affected by how productive your employees are – more productivity generally means more profitability.  If you want to maximize value, you must right-size the organization.

Right-sizing means having the right number of the right people in the right jobs to accomplish your company’s goals and objectives.  With that concept in mind, you should “begin with the end in mind,” as business writer and consultant, Stephen Covey, would say.

Your company’s goals and objectives:  The downturn may have drastically altered your company.  You may have repositioned yourself or changed product lines or markets to make it through the tough times.  Now may be the time to think about who you want the company to be in the recovery.  Do you want to continue with the strategies you adopted previously and make them stronger, or do you believe the recovery offers you the chance to accomplish something totally different.  Define your goals in terms of customers, product/service lines, brand positioning, employee satisfaction, and profitability.  You’ll need to be clear on each of those to go to the next step.

The right jobs:  What infrastructure does your company need to accomplish the goals you developed from the last step?  If you’ve decided new products are the wave of the future, you may need to beef up your Research and Development department.  If you think customer service will be the brand differentiator for your company, your service and sales department may need to change.  If speed to market is critical, your order, manufacturing and shipping processes may need to be expanded.  Flow chart what needs to happen to achieve your goals, and then break those processes into functional jobs that make sense, utilize reasonable skills sets, and maintain adequate controls.  Research best practices in your industry to see how each job can be done most efficiently, and plan jobs to take advantage of those ideas.  (Visit www.kboptions.com if you need help with this step.)

The right people:  Once you’ve defined the jobs that need to be done, you need to give some thought to the kind of people who could best accomplish those jobs.  What skills, education and experience would they have?  What temperament or behavior style would make them best suited to that type of work?  How will you screen potential employees to see if they fit what you need?  In other words, will you know a good fit when you see it?  Get your selection process in place so that you can put the right people into the right jobs.  This applies to your current employees and any new ones you’ll bring on.  We want to plug people in where they can best succeed, not set them up to fail.  (Visit www.altmaninitiative.com if you need help with this step.)

The right number of people:  This may be the toughest question of all.  How many customer service reps do you need to handle 500 customers?  How many billing clerks do you need?  How many sales people will it take to reach your goals?  Determining the answer isn’t purely scientific, but some data can be used to help you with these decisions.  You can find that data in a number of places including your own historical records.  For instance, by using your accounting and payroll records, you can determine how many man-hours you spent to produce a certain outcome (invoices produced per clerk, clients brought in per sales person, etc.)  You can also pull information from your trade association on many of these data points.  Check the association’s website or call to ask if they compile such information and if you can gain access to it.

As always, you must use a little common sense.  Your company isn’t just like anyone else’s, and your way of doing things may require fewer or more people as a result.  But using this information can help you get a “ballpark” read on your staffing plan.

Now is a great time to start readying your company for recovery.  Position yourself and your company for success!

Will you lose employees when the economy recovers?

About two years ago, the topic of a pending labor shortage was making the news.  There were articles everywhere about the retiring of the baby boomers and the inadequate number of people ready to fill the void.

And then, the recession hit with full force.  Suddenly, the pending labor shortage wasn’t all that important anymore.  In fact, unemployment numbers began to rise.  Not only were there ENOUGH people to fill the jobs, there were TOO MANY people for the jobs available.

Thus goes the cyclical nature of most economic phenomena.  But, as they say, “what goes up must come down,” and with that comes yet another challenge.  Once the economy rebounds, will you be able to keep the employees you have?

This is particularly important because many companies who needed to trim staff started with the least productive workers, as one would expect.  That means that the employees who remained were the most productive.  They were likely also the best trained, had the best attitudes, and had the highest potential to impact the company in a positive way.  These are the people you most want to keep as the economy rebounds.

Shifting attitudes

Many employees, even the ones who kept their jobs during the downturn, have become jaded.  They witnessed their friends and family dealing with layoffs, company closings and hard times.  They often feared for their own jobs, not knowing which companies would be able to survive the continuing economic decline.  That sort of stress has long-term impacts.

Add to that the inability of companies to give raises and bonuses or to pay for training and development, and you see a further deterioration in morale.  Loyalty of employees to a company was already waning before this downturn, and now, it is likely to deteriorate further.

What do employees want?

This is the 10 million dollar question, and it has been for years.  The general wisdom has pointed to “meaningful work,” “being in on things,” “feeling appreciated,” and “opportunities to grow and develop.”  All of these are likely true at one point in time or another, and from one person to another.  Economic factors, while often deemed not a motivator, also come into play. 

Maslow’s Hierarchy may have a place here.  When employees are worried about paying the mortgage and putting their kids through school, self-esteem and self-actualization may take a back seat.  The immediate need for economic resources takes precedence. 

As recovering companies compete for employees, they all want the best and brightest.  Competition for those folks means that the stakes rise.  Salaries, signing bonuses, relocation packages, incentive compensation—all of these will be tools companies use to entice the best to leave the fold and come over to the other side.

Even when the economy is good, many employees have learned through observation and experience that moving up often means moving over—to another company.  If they want to advance in position or compensation, they often find it easier to negotiate with a new company than with their existing one.

How do you view your employees?

There’s an old joke about a man who has an opportunity to choose between Heaven and Hell.  When he takes a tour of each, Hell looks much more inviting than Heaven – all the good things of life are at your fingertips!  So, the guy chooses Hell.  Once he makes his choice and arrives, he finds the lake of fire and torment.  He questions the Devil about this, and the Devil replies “then you were a prospect, now you’re an employee.”

Too often, employees feel that this is the way they are being treated.  Their value seems to diminish once they come on board.  They aren’t “special” anymore.  That’s why they are more easily lured to other companies – the people who are courting them make them feel special.

The flip side, of course, is that we know more about our employees than we did about them as candidates.  We’ve learned about their rough spots and foibles.  We know them as the flawed human beings that we all are – not just the story they sold us during their interview.  Potential employees, of course, have similar rough spots and foibles—we just don’t know what theirs are yet.

We also get into a mode of justifying why we can’t give an employee a raise or bonus during tough times.  We feel badly about that, and it makes us feel better if we can point to something that at least partly justifies the decision.  “Well, remember last month when he missed that deadline…”  We end up focusing on what employees don’t do instead of what they can do. 

We feel a bit of a disconnect when we’re saying to our employees, “You’re so great,” and giving them 0 – 2% raises.  We’re afraid, at times, that they are going to push back.  “If I’m so great, why can’t you find a way to help me out?”  Avoiding this disconnect may result in employees feeling unvalued.  And that will hurt us when the economy recovers.

So, what’s the answer?

Employees, similarly, become disenchanted with the current employer and see the prospective employer as more worthy of their time and effort.  They know our rough spots and foibles, but not those that exist at the prospective employer’s house.

It seems no surprise, then, that communication is the key.  If the grass is always greener, perhaps we need to talk about our own lawns.  What do your employees want the company to be?  What does the company need employees to focus on?  How can the two work hand in hand to better serve customers and make the company stronger?  Employees and employers aren’t adversaries, they’re partners.  Or at least they should be.

Some of the companies who have forged this kind of relationship with employees cite openness and honesty as foundations.  If employees know what you’re trying to accomplish and how you’re going about it, they can better understand how they fit into the picture.  Employees need to understand how they personally impact the company’s success AND see that employees benefit as the company succeeds.  When this direct connection is clear, employees feel empowered.

I held a training session at a large, well-known company a couple of years ago.  During the session I asked the group how their jobs impacted the bottom line of the company.  I received blank stares.  Only after spending some time on how their function impacted other departments were they able to draw a clear line between their function and company success.

How does your company ensure that employees understand their contribution to the company’s success?  Do you talk about it?  Do you let employees know when their work or ideas prompted a good result?  Do you explain how their actions took a toll on company profits and long-term success?

From on-boarding all the way through their career, employees should know clearly how they impact the company, and they should be treated as an integral part of the company’s success or failure.