You might be laying people off, but don’t be penny wise and pound foolish. There’s a reason your most expensive people are expensive. Going through a spreadsheet with names and salaries to make cuts is probably the worst way you can accomplish cost savings. After all, these are the people that provide you with your core-competency, right? You have to make sure that you’re keeping the cream of your crop.
If you don’t know who those people are, you have bigger issues going on than just the economy. Some management has no idea what its people do day-to-day. Find out what your people do – and not just their role or job title. In fact, find out as much as you can about your people’s skills beyond their work. One company, through several rounds of layoffs, let go of the last person who was familiar with the design of an electrical component still in production and being sold to customers. This is stupidity at its best. Your thought workers are the essence of your company.
Consider Wendy’s founder Dave Thomas. Prior to starting his hamburger chain, he was in the fried chicken business. Thomas turned around four failing Kentucky Fried Chicken restaurants, introduced the famous rotating bucket of chicken sign, reorganized the famous chain’s menu and sold the franchises back to the company for a cool $1.5 million (if that doesn’t sound like much, keep in mind that this was back in the 1960s). His departure to start his own place was a friendly one, but imagine what he could have done for KFC had they offered him incentive to stay.
Then there’s Michael Bloomberg. Before becoming mayor of New York City, Bloomberg and 61 other partners at investment bank Salomon Bros. were laid off as part of a corporate merger. Bloomberg turned the $10 million severance he received from the proceeds of the company’s sale into his own $20 billion business, financial information giant Bloomberg LP. Wouldn’t you like an entrepreneur like that in your idea department?
Of course, not all workers have the potential to make your company better. Removing truly weak links can only strengthen the structure. But accidentally do away with the best and the brightest, and be prepared to watch your competition grow stronger.