Linda Klassen Brown says

"2009 the Year of Challenge, Innovation, Change & Opportunity"

Christmas is over, 2009 is here and whether we like it or not the New Year has ushered in the deepest recession to date. The effects of this recession are going to touch us all in some way and we are going to have to come up with new and creative ways to deal with it.

This time in our history could be viewed as depressing, scary and sad or a time of challenge and opportunity......... exciting. As a perpetual optimist Iacknowledge the challenges ahead while I look forward to and predict that it will open new doors and opportunities which will result in creative and innovative solutions.

Without exception all of my clients are currently grappling with change. The shape of their businesses is changing, while some are winning new business and growing they are finding this is happening at the same time as other parts of the business are feeling the full effect of the slow down and the inevitable result of cutting costs resulting in the need for fewer staff.

Over the past decade downsizing, reengineering, realignment and restructuring have all been used to ensure the successful survival of the business while usually resulting in individuals losing their jobs. However you look at in my experience there is a human element to this and however it affects you, it is difficult, emotional and in the main while most people will put on a 'brave face' all find it emotionally draining whatever side of the desk you are sitting on! When I say 'all' I do mean ALL, as I have seen grown men cry as they have had to give the news of redundancy to their staff, even when the messenger is not among those immediately affected.

I do not see restructuring and subsequent headcount reduction as a negative; I believe it can be a real opportunity for the business and for the affected individuals. I believe I can speak to this topic from the business perspective as well as the very real and personal affect it has on the people involved. As the HR Director on the executive of an IT company we undertook a full business restructure which resulted in reducing the headcount and when my husband and daughter were made redundant I was only too aware of the affect it had on them and us as a family.

So, how does this affect all those involved? There are 3 groups which you need to understand and consider when making any cost cutting changes to your business these are your customers, staff that stay and the staff that leave.

Your Customers

We all know that without our customers we do not have a business so first and foremost any changes we make to the business must consider how this will affect our customers. Any change you make needs to have a communication plan and post change strategy for ensuring your customers are, remain and know they are your top priority.

Changes to your internal structure will affect your customers, who will they talk to now, what affect will the changes have on the products, or services they receive and ultimately their confidence in your business? With so many household names disappearing from the FTSE or high street your customers will feel very vulnerable, not knowing who they can trust.

Communication is key.......... keep close and keep your customers informed, strengthen the bond of trust. That means keeping your promises, improve customer service and make sure your customers know how important they are to you. Doing this at a time when you are making internal changes to your business is anything but easy, but it is critical. Your business success depends on your ability to make internal changes which enhance your customer experience, and are recognised as positive through the eyes of your customers while doing it through revised structures and potentially with less people.

As a customer I do not care how you are structured internally all I want is reliable, value for money products and services, support when I need it which addresses my need and a supplier that I trust to deliver what I need and when I need it. Keep it simple.

Cost Cutting - Avoid Knee Jerk Decisions

If your business needs to realign to the new market challenges ensure you are taking the view which recognises the opportunity you now have. Avoid knee jerk decisions when made in the face of crisis without taking full consideration of the business implications.

The changes you make to your products and services will have an effect on your customer – will they be positive or negative? Your customers will be looking at ways to reduce their costs and overheads, what do you have to offer which will help them to achieve that or conversely what offer do you have that will ensure your customers are able to sell more products and services? The temptation is to look internally when our focus needs to be both internal and external – there is no one size fits all.

Businesses often begin their cost cutting by taking cost out of the business in areas which are seen to be quick wins. This is often done without a clear business strategy to support the decision. Cutting training or more to the point stopping it all together is seen as an easy and quick win which has little long term affect on the business! Research has shown that businesses that cope better and come through the tough times stronger are those that find innovative ways of making a smaller training budget go further and not by doing away with training altogether.

The second place which is seen as an easy win is to cut the marketing budget which again has been shown to damage the business going forward and businesses which find more cost effective ways of marketing and in some cases increase their marketing spend are the ones which come through the recession in better shape than their competitors.

Most importantly and before making any cost cutting decisions, there must be a clear and unambiguous strategy which the leadership have confidence in and all support. At this time more than any other, consensus, clarity and effective communication from and by the leadership are paramount. The leaders need to communicate more, have a clear and shared message and above all be visible to staff and customers. Your staff need and want to know you have a plan, what it is and what they need to do to help achieve it – they want to see and talk to their leaders. You need to make yourself available and encourage two way communications. Involve the staff in finding and developing new business and finding ways to reduce costs. Where possible, share your financial information with them, let them know what the situation is and where help is needed to achieve the goals you have for the business.

The Staff

All of your staff whether they are selected for redundancy or remain with the business will find the whole process very unsettling, some finding it as traumatic as bereavement. Building in support for both groups of staff when you plan a redundancy is paramount.

Staff that stay have lost colleagues, no longer know how the business will operate, processes will be broken and expertise lost. For those that leave, whether or not they understood why they were selected will feel they were somehow personally responsible and you do not know when they will be a prospect, customer or in a position to influence your business opportunities.

The Selection Process

Above all else this process must be clear communicated and fair. While you will have clear business strategies which underpin the decision to reduce the number of staff employed by the business it is imperative that you ensure that the process to make the selection is fair and seen to be so.

From a process perspective, start with a redundancy policy which outlines the policy and process the business will apply and then do what you say you will do.

Involve your staff in agreeing the selection criteria, have a meaningful consultation process, make sure your managers are fully briefed and supported by expertise when they need it.

Do not underestimate the effort that will be needed by the leadership and management in going through the redundancy process all while supporting your customers and planning for the future. Make sure you have the support processes in place to enable yourself and your management team a safe place to voice concerns, seek advice and support as required.

The Aftermath

Plan the structural changes, identify and articulate the changes to process and the new job roles which will remain. Communicate, communicate, communicate. Your staff need the leadership to be visible, know the answers to their questions and ensure the confidence of the business is seen and felt. Do not hide in your office and avoid the difficult situations!

Make sure your customers know what changes have been made which will affect them, make sure your staff know what they need to communicate when dealing with customers. Have a plan for your customer care and implement it.

I have seen very well planned programmes fail with an implementation that lacks support, communication and a clear strategic outcome. It is straightforward in planning a defined process it is far less straightforward in implementing a programme that lacks a clear and long term strategic business outcome.

Challenges experienced through a business downturn cannot be underestimated but the rewards are there for those with the vision, persistence and the right team to deliver.

Next month we will look at the challenges of taking on new staff in a buyers' market........what can be difficult about that?

Linda Klassen–Brown MD
Business Adrenalin Ltd

Contact Linda
145 – 157 St John Street,
London. EC1V 4PY
T – 0870 752 4338
E – info@businessadrenalin.com
W – www.businessadrenalin.com