The Strategy of First Resort

By Jerry Seibert

From Part 1 and Part 2 of my Trove series, we now know that some cost cutting actions used to navigate a recession are much riskier than others in terms of their effects on employee alignment, capabilities and engagement (ACE). And in a case of “no good deed goes unpunished” if you try to avoid cutting people or pay by cutting back on service to customers, you may actually cause more damage to ACE than if you had a round of lay-offs or reduced compensation.

Each of the tactics for managing through an economic downturn described in Parts 1 and 2 can certainly be considered reductive, if not outright destructive in their fundamental nature. Leaders may choose to think of them as “pruning now for future growth,” but that does not change the fact that such pruning has serious repercussions for employees and the customers they serve.

In our research, we have found one strategy that does not fit the mold, that cuts costs and actually improves alignment, capabilities, and engagement: Urgent and systemic identification of process changes to reduce costs. For example, using resources freed up by slowing production needs for new innovations. Companies using this tactic have found a strong positive impact on alignment and engagement, and a moderate positive impact on capabilities. This is an activity that most companies are already involved in, but usually on a project or piecemeal basis. Supercharging those efforts is a tactic that maintains consistency with pre-existing goals. Looking within the organization to collaboratively make improvements and reduce costs therefore actually increases alignment. And chances are, the stated values of the organization are much more in line with this approach than any of the other cost-cutting approaches.

For employees, this tactic represents the company choosing surgery over amputation. Not surprisingly, this path actually leads to higher levels of engagement. Employees are highly attuned to organizational behavior that values people and that recognizes their ability to help a company prevail in challenging times. Further, success in these efforts is inherently rewarding, leading to a sense of accomplishment and feelings that one’s contributions are important and meaningful. There is a lesson here for every organization facing a difficult future in a down economy.

Lesson #3: Live those corporate values. Treat those “most valuable assets” as if they really are just that. Tap into the wealth of knowledge they have to drive cost out of your systems. It may not be as fast as pink slips, but in the long run it will absolutely serve your organization better.

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Jerry Seibert is an Executive Consultant at OrgVitality and an author of Hidden Drivers of Success: Leveraging Employee Insights for Strategic Advantage. With over 30 years of experience in the industry, he consults with organizations to assess how well talent investments are being optimized in organizations and help drive change that enhances employee alignment, capabilities and engagement. For more information, contact Jerry Seibert directly.