Editor's column:Careful with that ax Featured

10:48am EDT October 23, 2001

Panic is never good.

It makes us act rashly. It makes our hearts race and our palms sweat. It leads us to believe a situation is more dire than it typically is.

So stop panicking about the economy. It's not worth it.

Sure, some belt-tightening is in order during business slowdowns, but some of you are scaling back too much in your rush to prevent the sky from falling. In doing so, you are actually endangering your company further.

It's easy to work yourself into a frenzy over a poor financial outlook. After all, positive cashflow is everything. And when you've just revised your sales projections downward and you need to put company expenses in line with that new figure, the hatchet inevitably comes out.

Hold on. Before you start figuring up the body count, try being innovative.

Instead of laying off your six lowest-producing sales people, for instance, switch them from base-plus-commission to 100 percent commission -- but pay them a higher percentage of each sale. That way, you don't have poor performers weighing down your balance sheet month after month, and those who can improve their sales will be adequately rewarded.

If you lose a few people under the new system, so be it. You were going to cut their jobs anyway.

Another option is barter. When money is tight, trading your product or service to cover a budgetary necessity -- office supplies, commercial printing, courier services, even rent -- could help perk up your bottom line.

If, after exploring options like these, layoffs are still necessary, step carefully. Remember:

  • Every staff cut puts an additional burden on other workers who are expected to pick up the slack. Not only is that a morale killer, but suddenly those you counted on most are spending time on tasks they didn't sign up for -- and may not be qualified to do.

    Frustration mounts. Their production slips and doesn't recover. It can't. You've simply put too much on their plate. You've set them up for failure. Your company will pay the price.

     

  • If you cut down your work force to the point that every single person is indispensable -- so there is absolutely no redundancy in any position -- you're running too thin. People get sick. They take vacations. Accidents happen. You need to be sure your company can survive all of the above -- simultaneously.

     

  • Smart companies find ways to eliminate most, if not all, the job tasks of the positions they're cutting. Slashing production staff by a third? Better phase out your slowest selling products along with those jobs. Eliminating the HR staff since you're under a hiring freeze?

    Better outsource your benefits administration, since the stream of 401(k) and health insurance inquiries from "surviving" employees -- as well as the paperwork that goes along with payroll, government reporting, employee evaluations, etc. -- won't just disappear with the HR staff.

     

Recessions are scary, no doubt about it. But if fear causes you to cut back too far too fast, you may wind up worse off than if you'd done nothing at all. And that, my friends, just might be reason enough to panic. Nancy Byron (nbyron@sbnnet.com) is editor of SBN Magazine in Columbus.