Thursday, 31 March 2011 20:01

People vs. profit

In this hyper-competitive economy, everything is about speed. How quickly can you get a new product out the door? How fast can you deliver a service to a client? How long until that report is done? No one needs anything now; they needed it 30 minutes ago.

The result is an environment that demands ultra efficiency at every level. Companies of every size have been turned into machines, with senior managers tasked with fine-tuning them to the specifications set by the CEOs. If a particular part of the machine is slowing it down, that part needs to be changed out for a better, more efficient one. The moral dilemma comes when you start looking at the parts — they are people, not pieces of metal. Too many CEOs are looking at people as a means to an end, rather than human beings.

It’s a danger of our capitalist society that some leaders look at just the numbers, forgetting that there are many names and faces behind each line on the budget. You can be torn between building a cash reserve or achieving maximum profitability to please investors and being fair to the people who may not be performing up to the standards you would like to see. The question is, what do you do about it?

The easiest solution is to simply get rid of the people who you think are holding you back. This was Jack Welch’s philosophy — chuck the bottom 10 percent each year and your machine will continue to get better. There’s no room in business for having a soft spot for underachievers and there is no time to bother with them, so out they go.

While this model may be best for the short-term finances, is it really the best way to go? How many of those people had potential, but didn’t understand what they were supposed to be doing? How many of them simply needed clear goals they could strive for? And was productivity hurt as people in the middle continually fretted about where they ranked within the organization? Also, at some point, your organization would be as efficient as it could be, meaning those in the bottom 10 percent might be pretty good employees — and you might be hard-pressed to do better when you go to replace them.

The tougher solution, at least from a straight business perspective because of the cost in time and money, is to invest in the people who aren’t allowing you to reach peak efficiency. This could range from making sure they understand their goals and the company objectives to investing in training and development so they have the right skill set to do their job in the best way.

If given the time and the opportunity to improve, many of the people on the low end of the performance scale will improve, and a select few will even blossom into full-blown superstars.

The new economy isn’t just a rat race; it’s a digital rat race with speeds increasing exponentially each year. You may want to invest in people, but your competitive environment may simply not allow you the time to do so.

Each business is unique, and there are pros and cons to both strategies. But what’s most important is that, regardless of which direction you choose, you never lose sight of the fact that there are people behind the numbers, and people are what matter most.

Published in Akron/Canton
Wednesday, 02 March 2011 11:47

Staying afloat

In these tough economic times, the ability for companies to become more profitable is being challenged not only by a more competitive business climate but tremendous business uncertainty, which is caused by the government. Moreover, many organizations must deal with inflation, which is increasing commodity costs in an environment where these additional expenses are difficult to pass along to customers.

In such a situation where everything is in flux and everyone, it seems, is demonizing business while simultaneously asking it to hire more and increase its costs, you must do everything you can to become and stay profitable.

These are the steps I would prescribe to help your company become and stay profitable.

1. Eliminate waste at every level, scrutinize every cost, and do it publicly. The worst thing you can do is allow an environment to flourish where workers believe management does not care about costs.

2. Have no sacred cows. Look at everything from a fresh perspective.

3. Be transparent. Some managers may be concerned about sharing too many facts with workers, but the reality is rumors can be much worse than the reality you share. If your company is in a cash crunch, discuss how you plan on getting out of it and how the team can come together to help you get through it.

4. Talk to the star performers separately — let them know how valuable they are. Be sure to do everything you can to keep them with you as you navigate tough times. Offer them incentives to stay on and continue doing positive work.

5. Use technology and cloud-based applications from companies like Google and Salesforce.com that are often a fraction of the cost of in-house solutions that require servers and a tech support team.

6. Explore unified communications and VoIP to save money and allow you to take advantage of lower-cost workers who are not physically located in your office.

7. Find freelancers to help lower costs and pay them based on performance. Use sites like Craigslist and Elance and others specific sites in your industry.

8. Consider a shorter workweek — four days instead of five or a week off over the holidays or summer. Unemployment payments from the government will offset some of the financial pain this could bring on.

9. Solicit ideas from your team on how you can lower costs, and give a reward to the best suggestion.

10. Do not cut the little things like bagels, doughnuts or other cultural cornerstones of your company.

11. Remind everyone that most companies and industries go through cycles: GE was thought to be going bankrupt; GM needed government assistance to survive and so did AIG and myriad banks.

12. Look at recognizing top performers in other ways besides using money: Give awards for best performer, best team player and best customer support, etc.

13. Hold regular meetings to ensure people see you are confident about the company’s future. Remember, your fear and concern about the future can be amplified by your workers and can do worse harm to your business than the original problem.

14. Do not be aloof or act in any way that will make your workers think they aren’t appreciated.

15. Have a vision for the company’s future and share it frequently — nothing is worse than working in the dark in an uncertain economy.

Rich Tehrani is CEO of TMC, a global media company serving the communications and technology markets and reaching more than 2 million global decision-makers each month. Many of the ideas above have been gained from navigating a publishing company through the tech and telecom bubble bursts of 2001 and transforming an organization relying on revenue from printed magazines into one which generates most of its revenue online. His company can be reached at www.tmcnet.com and his blog is located at www.tehrani.com.

Published in Los Angeles