A people perspective to managing in hard times

Customers are deferring purchases, Corporates are putting growth plans on hold and finding monies difficult to come by just to keep the home fires burning! Suddenly the lexicon of business has changed. The focus has shifted from growth to consolidation, revenues to costs, profit to cash, from now to later, the list goes on…
Until a few months ago one of the key concerns of top management and corporate boards across the globe was managing talent- be it finding the right talent, managing with inadequate talent, developing talent, paying talent appropriately, retaining talent –finding new ways in more effectively engaging talent and managing the people side of business. Suddenly all that incredible human asset that made the difference between excellence and mediocrity is now a heavy cost that should be controlled, ‘managed’ , cut and everyone is scrambling! Yes these are tough times. It’s anybody’s guess about how long this will last. Over the last few weeks we’ve been reading of sectors like IT, BPO/KPO, realty, and a few more laying off employees, effecting across the board pay cuts and revoking employment offers. Having witnessed similar response once before in my life time (the post dot.com days!) and living long enough to see the impact of these cost controls, I thought this is a good time to share some thoughts on how Corporate India could manage the people side of business in these times.

Communicate

In tough times the first rule is to share information and maintain strong communications with employees. Treat your people with respect and as individuals capable of understanding the current economic & business environment and of contributing towards finding smart & sustainable solutions.

1. Communicate vulnerability: Do not think they do not understand the whole economic forces and reasons. Explain to them what the company is faced with and what the stakes are and let them appreciate the link between the cost reduction goals and the company (CEO) vulnerability.
2. Tell them what they have to do unequivocally. But explain the context. Most companies keep the financial processes and share holder value well away from their employees.
3. Communicate CEO KPAs to all employees. And help each employee appreciate how his contributions can help. This is especially important when hard initiatives are underway.
4. Communicate credibly: Credible communication happens when your personal actions are in synch with your spoken words. People around you can spot the difference very easily. Companies which have trust at the core team level can use the underlying relationships to enhance communications credibility, others have to try harder.
5. Beware of Technology when it comes to critical communications. Do not fool yourself by thinking that professionally crafted corporate communications with CEO’s shadow email id will be lapped up by people. The same for virtual town-halls with pre-recorded speech videos. Go out there and stand (not sit) and talk.
6. Communicate frequently: Use both formal and informal means. Encourage your teams to communicate.
7. Lead from the front: Make an example of what you personally are changing / sacrificing and let everybody know that. You will be surprised at how this will inspire people into action.
Establish connection between company consequences and individual consequences. Now we are all conditioned to think of ‘consequences’ as something negative only. It is both negative and positive. In other words, people need to once again be told their survival is linked to company survival as much as their growth is linked to company growth.

People costs are all about Productivity

Work with your teams with a focus on productivity and costs will get managed automatically; this is more energizing.
1. Call your teams in and offer a ‘20:25’ scheme. Every team should come up with a 20% structural people linked productivity increase plans. Constitute a Productivity council, which will approve such plans. On successful implementation and results, the 25% of the productivity gains will be disbursed to the teams as bonuses. This will be best achieved if it is implemented at the Division / Profit center level and also at the lowest operating unit level and when parameters for success are clearly defined/ articulated.
2. Measure employee productivity from the value delivered to paying customers. You will open your eyes to high productivity items in the traditional sense but delivering little or no value to customers directly. This is not new. It is a good time to re visit the ‘Leans’ and ‘Blue Oceans’
3. Get everyone to go one step beyond their job either in a type of work or type of skill. Add a little Sales to strategy folks. Get your finance guys to get involved in customer value definitions, Get your programmers to do a bit of QA. Give Adam Smith & Henry Ford a little break and change focus from number of activities needed to get one job done to no. of people involved in getting one job done. Some of the world’s best software got written by the smallest of the teams. Multi skilling and smaller team size per job could be the future.

Time for innovation and break thru thinking:

The best human response happens when ones back is against the wall. Line up the holy cows and ask for the speed of a steed with even better milk quality. In short, demand from yourself and your teams the unthinkable.
1. Cost – Customer Value: Demand decrease in costs and increase in customer value. At the least, what has always been taken for granted – the customer value – will come into focus and all activities will be evaluated in the light of direct connection to the customer value
2. Time – Scale: Demand scale in the least possible time
3. R&D Budgets – IPR Value: Demand more IPR while decreasing R&D budgets
4. Sales Cost – Sales: Increase sales while reducing sales costs.

This list can go on. And many a wise men in your organizations will shake their heads. But if you manage such cynicism effectively, unknown opportunities can be stumbled upon.

Some options on wage bills:

1. Offer unpaid vacations. Make it mandatory, yet flexible. Something like within the next two months everyone has to take 5 days unpaid vacation. This vacation has to be pre-approved by the reporting boss. Dell has done this.
2. Encourage sabbaticals. Infosys has gone one step further in offering employees reduced salaries to work with NGOs. In my view this is an excellent case of combining CSR and Company image building while giving employees a sense of purpose during their time of personal confusions. Ok. Not every company may be in a cash position like an Infosys to offer part salaries for a year. But think of initiatives and support actions which keep the employee relationship with the company till you tide over the crisis.
While the argument of weeding out negative or non contributors is a compelling one in such times, the decision to reduce has to come from factors such as the type of industry, the culture of the organization,the quality distribution of its people and the situation the company is in. If you have to reduce people numbers, do it with utmost sensitivity, transparency and fairness to both the ones who are going and the ones who are staying. Also consider deeply and ensure your decision is not going to land you to bigger woes.+-

Some General thoughts:

1. Over panic yet be sensitive: These times offer a very unique opportunity to look at all things from a zero based perspective as against the good times. Structural cost opportunities can be spotted and exploited more than ever. However the trick is to release energy from employees as against sap them.
2. Be vigilant to spot leaders using this opportunity to weed out political ‘enemies’. Self interested actions in any form have to be spotted and eliminated.
3. Guard against DNA damage: Yes. There could be survival at stake. In the absence of timely action, the company may become extinct. The time it takes for You to communicate and create consensus is as much a challenge as it is to meet your cost goals.
4. Link with their personal lives: One way for people to relate with what organizations go thru is to start from their personal lives. Organizations can proactively coach its people on personal finances. It will be a gesture in with the times, showing empathy and understanding.
5. Outsource. India’s great B (or a K) PO industry is beginning to look at India also as a market. This presents a good opportunity in converting some of your fixed employee costs into variable cost. Talk to them. But structure the deal in such a way that your people will have continued employment with them.
6. Yes. This is the time to re-negotiate your contracts. But treat your suppliers also just like your employees. Communicate honestly your need of the hour and how you need them to help you and your commitment to the relationship. And communicate comprehensively. Who knows? They may have some solution to your some of your problems well outside the current contract.
7. Cost controls, when eagerly adopted by people can become a service nightmare! – For your customers, employees, and lenders. Watch out for your service functions (Accounting, HR, IT etc.) turning into control functions. If there is a control which has to be exercised, talk to the constituencies first and then implement. This is critical in avoiding unintended damage.
8. Invest in your future with your people. Whatever is your companies’ position, pick a few bright people and make a ‘future team’. They should be looking at life beyond today and help formulate a vision for the future while ensuring that none of the crisis initiatives erode the long term competitiveness of the company.
9. Co-ordinate all your initiatives. HR may be initiating an e-learning drive to improve cost effectiveness of training. But IT may be busy cutting available bandwidth to people. Result: Training suffers.

Lead from the front

1. Yes. That Benz – E is two year old & time for an upgrade. But this is just not the time. Employees watch and learn from visible lifestyle. Personal thrift helps a lot, when you tell them to travel economy.
2. Similarly, trim your bonus and your top team’s bonuses, in line with what your whole company is going through, and let the employees know. This will bind your top team and the employees towards a common goal of seeing the company through.
3. Increase your personal through-put. Strategy and direction setting are great skills. How about making a couple of personal sales calls? And spend time with that particularly painful customer of your company and ask for advice. Your teams will get the message and see the results for yourself.
4. Look around your immediate self. There are people who are being employed for ‘availability’. EAs, Secretaries, chefs, security. Nobody looks at their productivity but you! Consider, sharing, multi tasking, multi skilling. But it is important that you communicate what you tell others to do. Also this is a good time to check if you are causing organizational waste, by making hi-cost resources wait by not keeping time or by delayed decisions.
5. Become very healthy. You want to be a healthy survivor. Not a sick one. These are the times you have to bring your full self to work. Do Yoga, exercise. Control excess in any form. Treat everyday as an on-stage day. And pass this message to those 12 (or whatever no of) direct subordinates.

Have some fun with people, preferably without alcohol. Foster groups around shared interests/ hobbies- jazz, pottery, bird watching, theatre. Besides developing strong team behaviors it will also foster community networks that will provide social support in times of need. In a country like India where there are little or no social security schemes- social support networks help in times of crisis & need.
Most importantly build an inspiring vision for yourself and your organization beyond the current circumstances. Here is an opportunity for corporate India to develop and work collaboratively to a shared vision of Nation building. This is the time the country needs good minds to work together with optimism and strength towards building a better future.

celine.george@peoplefacet.com