Lessons Learned

The lessons learned from Borden Foods are applicable to other companies involved in a business crisis and attempting to rally the troops at the same time. To revisit them:

Put together a simple plan that everyone can understand and work on.
Align the goals and objectives of everyone to be successful with the interlocking or cascading goals that “roll up” to ultimate profitability of the business.
Ensure that everyone has a financial interest in the outcome.
Monitor the goals to ensure they are achieved.
Communicate progress along the way.

The Seven-Step Process

It is critical to motivate people to stay during a business crisis. Once that is done, the hard work to cut costs and keep the best people really begins. Part Two of this book presents the headcount solution. In it the reader is taken through the seven steps necessary to survive the crisis and thrive in the future:

Step 1:	Prepare Your Organization for What’s in Store
Step 2:	Plan for Three Rounds of Cost Cutting
Step 3:	Decide Whom to Cut and Whom to Keep
Step 4:	Implement Across-the-Board Cost Cutting (Round 1)
Step 5:	Implement Alternative Work Arrangements (Round 2)
Step 6:	Implement Layoffs (Round 3)
Step 7:	Help Survivors Get Back to Business

Summary

Surviving the crisis begins with a concentrated effort to motivate employees to accept the challenges that will come.
Senior leadership should concentrate on keeping the right people for the right reasons.
The essentials for motivating people to stay are a simple plan, an alignment of interests, and incentives to make it worthwhile to remain with the company.

Part Two: The Headcount Solution

Chapter List

Chapter 4: Step 1— Prepare Your Organization for Whats in Store
Chapter 5: Step 2—Plan for Three Rounds of Compensation Cost Cutting
Chapter 6: Step 3—Decide Whom to Cut and Whom to Keep
Chapter 7: Step 4—Implement Across-the-Board Cuts
Chapter 8: Step 5—Implement Alternative Work Arrangements
Chapter 9: Step 6—Implement Layoffs
Chapter 10: Step 7—Help Survivors Cope and Get Back to Business

Chapter 4: Step 1—Prepare Your Organization for What’s in Store

Key Principles

Senior leadership must be honest and forthright about the difficulties the organization faces and the cost-cutting steps it may have to take.
Employees want news delivered promptly and clearly with no important data or facts hidden.
Employees want to know what will happen to their company in the short and long term as well as what will happen to them and their colleagues.

What’s In Store

Once the senior leadership of a business realizes that it faces a business crisis and that painful cost-cutting measures will have to be taken, the first step is to communicate the seriousness of the situation to the organization. Preparing an organization for major cost cutting, whether it will involve layoffs, requires thorough planning, execution, follow-up, and some old-fashioned handholding and compassion.

As managers start to heed the advice about the advantages of the headcount solution and how to implement it, one point becomes very clear. It takes time and effort. Furthermore, there is a great deal of uncertainty in making such drastic changes, and uncertainty fuels rumors and distrust .

There are savvy and considerate methods to communicate to employees what’s in store. These include the need for honesty and clarity to get messages across so that everyone hears and understands the same information clearly. Most of these approaches are based on real company situations and experience. Tables are included in this chapter that show what to communicate, which communication channels are best, and any communication programs that should be used. In addition there are suggestions about obtaining input from employees . All these approaches to open and clear communication will help prepare managers and staff for what lies ahead.

The Importance Of Honesty And Clarity

Organizations have learned that employees want honesty; they don’t want to be patronized. If a pay cut, hiring freeze, or layoff is in order, they don’t want to be told “I know how you feel.” In most cases their bosses do not know how they feel, especially if they were never laid off. However, the manager of compensation at a firm in Maryland was able to be more compassionate with employees when his company conducted the first two rounds of layoffs. He had been through layoffs before at another company, and he found that it was easier to tolerate them a second time. As a compensation manager, he said that the hardest thing to deal with after a first round of layoffs was whether the cuts were deep enough so the company didn’t have to go through the trauma of another round.

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Employees want to know the facts: why something is happening and the circumstances surrounding the actions taken (e.g., how many people will be let go, when is their last day of work, what is included in the severance packages, whether the company can help get them a job, and if they might be rehired later). Those remaining—the survivors—also want to know whether more cuts are imminent and when. It’s important for everyone to be brutally honest.

Honesty is the only way to break bad news. A loan company located in Kansas City, Missouri, doesn’t gloss over any news it must deliver but says it straight out. The reason? The goal is the same for each employee: Everyone wants to be able to get moving on their resume, networking, and hitting the pavement running.

People crave strong leadership. Former New York Mayor Rudy Guiliani became a shining example of a good manager who imparted bad news with sensitivity and candor. He didn’t pull punches and provided the wisdom of being forthright yet compassionate when he delivered daily reports after the September 11, 2001, terrorist tragedies. He updated the number of deaths, injuries, financial losses, and he shared his thoughts on how to cope. He told what he knew and admitted what he didn’t know. As a result he earned the kudos and admiration of a global audience.

David L. Brown, manager of compensation at CNF Transportation in Palo Alto, California, said his company has taken a similar approach. It tries to be open, communicate bad news honestly, summarize the external environment, tell the status of the company, and offer alternatives when it can.