Make a list
The first thing Davis did this time around, and the first thing you should do when you sense that trouble is ahead, is make a list.
“I would start making a list of every area where I can cut costs as quickly as I can,” Davis says. “It is fairly complicated, especially when you’re talking about taking people out of the business. Any kind of resource you have in the business, theoretically, you needed. Otherwise you shouldn’t have had it. And that happens too. When find yourself in these situations, you start to realize, ‘Gosh, why were we doing that anyway?’ So you start making that list with, ‘Here are the things we can impact immediately.’”
Davis suggests making your list in three tiers to account for the range of severity you might be about to experience.
“Here’s the not-so-bad recession list,” Davis says. “Here’s the pretty bad recession list, and here’s the Armageddon list. We were prepared in phases to go through each of those if we had to.”
This list can’t be something that you do yourself while locked alone in your office. You need to get your colleagues on the management team and your department heads involved from the beginning.
“I wanted to make sure people bought into it and as unpleasant as it is, this is where we are and this is what we have to do,” Davis says. “While none of us liked it, we all agree it’s the right thing for the company and ultimately, it’s the right thing for those folks who are left behind. So it was definitely a collaborative effort and not a mandate.”
Davis had each manager and department leader come up with percentages of cost reductions and dollar figures. It’s not your job to identify specific individuals to let go. Let your people who work with them on a regular basis and know their strengths and weaknesses make those decisions.
“They are closer to it than I am,” Davis says. “I hope they have the right answers because it’s going to be difficult for me to come up with given that I’m a couple steps removed. You’ve got to rely on your folks, hold them accountable but also rely on them to make the right decision.”
You can acknowledge that these are decisions that no one likes to make without falling into tired clichés.
“Just be upfront and honest,” Davis says. “This sucks, but here’s where we’re at. I’m not going to candy coat it for you. Here’s what we have to do. For the people I mentioned and I would even extend it to your 17 general managers, our executive team is about 21 people, I would treat everybody on the team like that. They wouldn’t be in those positions if I felt like a conversation like that was going to be send them into a tailspin.”
You can also offer your hope that the worst doesn’t happen and that the draconian cuts you’re talking about won’t have to be made. But if you don’t plan for the worst and the worst happens, your stress is going to be a whole lot worse. So you need to maintain a sense of urgency.
“I never had anybody that was that much of a holdout,” Davis says. “But if I did, I would say, ‘If you’re not going to do it, I’ll do it for you.’ Usually when you offer something like that, they tend to take it more seriously. Because the last thing they want is for you to be making the decisions for them.”
