Deep recessions put a double whammy on businesses. First, most companies have to reduce staff. That’s a given. But they need to do it right to reap the full savings. Unfortunately, the majority start downsizing much later than business conditions warrant. Plus they typically stab deep into flesh while trying to trim out fat–as evidenced by the frequency of companies slicing off customer-facing employees, only to start losing customers along with service staff.
Second, when not made correctly, substantial staff cuts reduce scalability, compromising capability to spring on new opportunities. So companies suffer now, when they cut–then suffer again when either recession-driven opportunity pops up or economic recovery kicks in.
Isn’t the recession bad enough by itself?
But wait, it gets worse. While most manufacturing companies at least know how to reduce production employment in a half-way rational manner, even if they don’t always show it, the vast majority of front and back office managers and service company managers don’t have a clue. Nor should they, because the concept of designing office process with the same rigor we apply to manufacturing process–using a process approach designed for highly variable office environments–is a foreign concept throughout business. Most office process change efforts consist of cramming manufacturing process methods down office throats–only to have office and service staff regurgitate everything process they’ve been fed.
It can get so bad that at one of our past clients multiple office people would stand and flip the bird to the six sigma team as it retreated to its hovel.
Cutting the office workplace down to size
Mistake #1 in office process redesign is trying to squeeze out every last penny of “unnecessary” cost–which, ironically, tends to lower the ratio of work done per salary dollar spent, the exact opposite of what’s intended. Creating a Spartan office environment reduces work quality, increases the volume of repair and recovery work, creates bottlenecks that lower throughput, and kills morale. It also kills customer relationships. Sprint tried this approach and so turned off customers that it’s single handedly fueling the growth of both AT&T and Verizon.
A Aligning process to strategy and technology to process
Smart companies facing a deep recession don’t practice “scorched earth” cost-cutting. They understand the first obligation of office staff is to carry out business strategies. When process fails to align properly with strategy, the two elements work at cross purposes–creating inefficiency, internal friction and customer flight. Plus, process–strategy misalignment increases the quantity of non-value-adding work performed, which increases the number of non-value-adding employees.
We saw this in spades when we worked with a large credit union a while back. Following alignment, they didn’t just reduce staff, they cut an entire function and combined several more. And when we reviewed HR which had five staff members and planned to add one more, we discovered that three could do the job. Extrapolating that 50% reduction across several other bloated departments shows the labor-saving alignment can achieve.
But wait. Isn’t process supposed to align with technology?
Hardly. Instead of subordinating process to technology, companies that “do process right” mold technology support around process. They use technology to enable process, not lead it.
r Surprising benefits
Redesigning work to achieve internal alignment must occur in proper sequence–first redesign process, then redesign technology support. When this occurs, companies realize surprising benefits. Not only can they shrink office staff further than they could using the “cost squeeze” approach, but there’s an unexpected benefit. The smaller office staff can provide more responsive customer service and increased customer attention. Why? Because proper alignment, with its focus on streamlining, reduces unnecessary “touches”–and even layers of supervision.
The first time we rolled out our Visual Workflow office process approach, a brave VP of a supervisory function stood up and said, “My function is redundant. We’re superfluous.” She resigned the following week.
T The final step–aligning people to process
All well and good, but don’t put the tools away yet, because there’s one more key alignment companies must make to achieve the desired results–significant reduction in office staffing requirements, complemented by improved customer relations. Just because a company intelligently redesigns office process does not mean staff will just migrate to the new work approach because they’re told to. To cite the old HR saw, “People don’t mind change. They mind being changed.” And when you tell them to change, they resist.
So how do you overcome human nature?
Simple. Don’t tell them to change. Involve relevant staff in redesigning process right out of the blocks–ideally in cross functional teams, since so many office process defects lurk in the seams between functions. Involvement creates buy-in and ownership. And it greatly mitigates resistance to change.
Also, implement change across multiple levels. Changing responsibilities and accountabilities on one level sets off a chain reaction. Management has to reset expectations to match up with redesigned work. And staff further along the work chain must be ready to receive new output. These aren’t just process issues, they’re people issues companies must address with training and support.
D Does the resulting staff reduction merit the effort?
Absolutely. On average, using People & Process Alignment techniques we’re able to create the potential to shrink office staff by 15%. In times like these, that’s huge. In past times, most clients have used the excess staffing to cover attrition or launch new initiatives without hiring. But during this recession, many companies will have to lay off instead. The good news is, and “good” is relative here, by properly aligning strategy, people, process and technology companies can do more front and back office work and better work with fewer people. For some companies, that could mean survival.